JK Technology Vs Deputy State Tax Officer (Telangana High Court)
The Telangana High Court considered a writ petition challenging the order dated 22.01.2024 cancelling the petitioner’s Goods and Services Tax (GST) registration.
The petitioner contended that the cancellation order was based on a ground different from the one mentioned in the show cause notice. The Court reproduced both the show cause notice issued in Form GST REG-17 dated 08.08.2023 and the cancellation order issued in Form GST REG-19 dated 22.01.2024.
The show cause notice proposed cancellation of GST registration under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017 on the ground that the registration had allegedly been obtained by fraud, wilful misstatement or suppression of facts. The notice directed the petitioner to submit a reply within seven working days, appear for a personal hearing on 15.08.2023, and stated that the registration stood suspended with effect from 08.08.2023. The notice also recorded that no case-specific supporting documents were attached.
The cancellation order referred to the same show cause notice but stated that no reply had been submitted. However, instead of relying on the allegation contained in the notice, it cancelled the registration under Section 29(2)(c) of the Act on the ground that the petitioner, being a person other than one paying tax under Section 10, had failed to furnish returns for the prescribed period. It specifically stated that returns had not been filed from 01 January 2023 onwards and cancelled the registration with effect from 01.01.2023. The order also directed the petitioner to furnish the final return in Form GSTR-10 within the prescribed period and to file all pending returns.
The petitioner’s counsel raised additional grounds challenging the cancellation order, which were contested by the learned Special Government Pleader for State Tax. However, the High Court found it unnecessary to examine those additional grounds.
The Court held that the writ petition deserved to be allowed because the cancellation order was founded on a ground for which the petitioner had never been put on notice. While the show cause notice alleged obtaining registration through fraud, wilful misstatement or suppression of facts under Section 29(2)(e), the cancellation order was based on the alleged failure to furnish returns under Section 29(2)(c). The Court observed that the cancellation had therefore been made on a ground entirely different from the one stated in the show cause notice.
The petitioner’s counsel further requested a consequential direction for immediate restoration of the GST registration.
Accepting the request, the High Court quashed both the show cause notice dated 08.08.2023 and the order of cancellation dated 22.01.2024 and directed restoration of the petitioner’s GST registration.
At the same time, the Court granted liberty to the respondents to issue a fresh show cause notice if grounds existed for proposing cancellation of the petitioner’s GST registration. The Court directed that any such fresh notice should contain specific grounds along with supporting documents so that the petitioner could submit an appropriate reply. It further observed that, thereafter, the proper officer could take a decision in accordance with law within a reasonable time.
Accordingly, the writ petition was allowed. There was no order as to costs, and all pending miscellaneous applications stood closed.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Learned counsel Sri K.P. Amarnath Reddy appears for the petitioner.
Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for the respondents.
2. The impugned order of cancellation of Goods and Services Tax Registration of the petitioner. dated 22.01.2024 was passed on a ground alien to the show cause notice issued by respondent No.1 on 08.08.2023 in Form GST REG-17. For proper appreciation, the contents of the show cause notice and the order of cancellation are extracted hereunder:
“FORM GST REG-17
[See Rule 22(1)/sub-rule (2A) of rule 21A]
Reference No: ZA3608230199639
Date: 08.08.2023
To
Registration Number (GSTIN ‘Unique ID): 36AQBPA9817C1Z7
Mohd Ahmed Ali
PLOT NO.70. GROUND FLOOR, JALPALLY, BALAPUR MANDAL,
Hyderabad, Ranga Reddy, Telangana, 500005
Show Cause Notice for Cancellation of Registration
Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:
1. Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts.
You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
You are herd)) directed to appear before the undersigned authority on 15/08/2023 at 11:30.
If you fad to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.
Please note that your registration stands suspended with effect from 08.08.2023.
Kindly refer the supportive document attached for case specific details — Not Applicable.
Place: Telangana
Date: 08/08/2023
NARSING RAO PALLYE
Deputy State Tax Officer,
CHARMINAR: Charminar: Telangana”
“FORM CST REG-19
[See rule 22(3)]
Reference No: ZA360I24054955F
Date: 22.01.2024
To
Mohd Ahmed Ali
PLOT NO.70, GROUND FLOOR, JALPALLY, BALAPUR MANDAL,
Hyderabad, Ranga Reddy, Telangana, 500005
GSTIN/UIN: 36AQBPA98 I 7C I Z7
Application Reference Number (ARN): A A360823014060R Date:
Order for Cancellation of Registration
This has reference to show cause notice issued dated 08/08/2023.
Whereas no reply to the show cause notice has been submitted;
and whereas, the undersigned based on record available with this office is of the opinion that your registration is liable to be cancelled for following reason(s):
Section 29(2)(c) — Person, other than paying tax u/s 10, failed to furnish returns for prescribed periods
The tax payer have not filed returns from 01 JAN 2023 to till date hence GSTN is liable to cancellation
The effective date of cancellation of your registration is 01/01/2023.
2. Kindly refer to the supportive document(s) attached for case specific details. — Not applicable
3. It may be noted that a registered person furnishing return under subsection (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-I 0 within three months of the date of this order.
4. You are required to furnish all your pending returns.
5. It may be noted that the cancellation of registration shall not affect
6. the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
Place: Telangana
Date: 22.01.2024
Sudha Rani Dhameera
Deputy State Tax Officer
CHARMINAR”
3. Learned counsel for the petitioner has taken other grounds also which have been contested by the learned Special Government Pleader for State Tax.
4. However,4. upon hearing learned counsel for the parties, we are inclined to allow the writ petition by quashing the order of cancellation of registration for the sole reason that it is based upon a ground upon which the petitioner was never put to notice. The cancellation has been done for allegedly non-furnishing of returns for the prescribed periods in teeth of Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 (for short. “the Act”). The show cause notice alleged obtaining of registration by fraud, wilful misstatement or suppression of facts in teeth of Section 29(2)(e) of the Act.
5. Learned counsel for the petitioner submits that a consequential direction also be issued to immediately restore the registration of the petitioner.
6. In such circumstances, both the impugned order of cancellation of registration and the show cause notice are quashed and the Goods and Services Tax registration of the petitioner is restored. However, liberty is granted to the respondents to issue fresh show cause notice, if any grounds exist for proposed cancellation of GST registration of the petitioner. Needless to say that the show cause notice should contain specific grounds with supporting documents so that the petitioner can submit a reply. Based thereupon, the proper officer can take a decision in accordance with law in a time bound manner.
7. The writ petition is accordingly allowed. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall stand closed.
