Vague & non­speaking SCN & Order: HC quashes order cancelling GST registration

Sing Traders Vs State Of Gujarat (Gujarat High Court)

Introduction: The Gujarat High Court recently delivered a significant judgment in the case of Sing Traders vs. State of Gujarat, addressing the petitioner’s challenge to the cancellation of their GST registration. The court found the show-cause notice and subsequent order to be vague and non-speaking, leading to the quashing of the cancellation order.

Detailed Analysis: Sing Traders, registered under the Gujarat Goods and Service Tax Act, 2017, received a show-cause notice dated 14.02.2022, citing reasons for registration cancellation, including suspicion and the absence of documents at the place of business. The notice mandated a response within seven days and a personal hearing on 21/02/2022. Failing compliance, the registration was suspended from 14/02/2022.

On 22.02.2022, an ex-parte order of cancellation was passed by the State Tax Officer, Ghatak-13, Ahmedabad, stating non-submission of a reply and absence on the hearing date. The order specified the effective date of cancellation as 11/01/2022 and outlined the payable amounts, which the court found to be without proper basis.

The Gujarat High Court, upon hearing arguments from both sides, concluded that both the show-cause notice and the cancellation order were vague and lacked essential particulars. The court quashed the order dated 22.02.2022 and remitted the matter to the respondent No.2 for fresh proceedings in accordance with the law. The judgment also reinstated the GST registration of Sing Traders.

Conclusion: In the final disposition, the Gujarat High Court, by quashing the cancellation order and ordering denovo proceedings, emphasized the importance of clarity and proper procedure in such matters. The revival of Sing Traders’ GST registration underscores the court’s commitment to fair and transparent administrative actions.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:

“(a) To issue a writ in the nature of certiorari and or any other appropriate writs, order or direction for calling of records of proceedings initiated pursuant to show-cause notice dated 14.02.2022 and after perusing the same be pleased to quash and set aside show cause notice dated 14.02.2022 and order dated 22.02.2022 passed thereon by State Tax Officer, Ghatak 13, Ahmedabad, and be further pleased to direct restoration of registration bearing number 24CDCPR3552B1ZX;

(2) To pass an ex-parte ad interim order staying the operation, execution and implementation of the order dated 22.02.2022 bearing reference no. ZA240222104600G passed by State Tax Officer, Ghatak 13, Ahmedabad, pending the hearing and final disposal of present petition; and

(3) Grant such further and other interim reliefs, as this Hon’ble Court may deem fit and proper in the present nature and circumstances of the case.”

2. The brief facts, as emerges from the record, are summarized as under:

2.1 The writ applicant is registered under the Gujarat Goods and Service Tax Act, 2017 (for short ‘the Act, 2017). A show cause notice dated 14.02.2022 was issued by the State Tax Officer, Ghatak – 13, Ahmedabad, in Form GST REG-17/31 under Section 29 of the CGST Act, 2017 read with Rule 22(1) of the CGST Rules, 2017. The reason specified in the said show cause notice reads as under:

“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. DEALER FOUND SUSPICIOUS. NO DOCUMENTS FOUND AT THE PLACE OF BUSINESS.

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 hereby directed to appear before the undersigned on 21/02/2022 at 11:00.

If you fail 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 14/02/2022.”

2.2 Pursuant to the show cause notice, the writ applicant was required to submit his reply within a period of seven days, failing which, the case was to be decided ex-parte. On 22.02.2022, the State Tax Officer, Ghatak-13, Ahmedabad, passed ex-parte order of cancellation of registration. The contents of the said order reads thus:

“Order for Cancellation of Registration

This has reference to your reply dated 21/02/2022 in response to the notice to show cause dated 14/02/2022

Whereas no reply to notice to show cause has been submitted; Whereas on the day fixed for hearing you did not appear,

The effective date of cancellation of your registration is 11/01/2022

Determination of amount payable pursuant to cancellation:

Accordingly, the amount payable by you and the computation and basis thereof is as follows:

The amounts determined as being payable above are without prejudice to any amount that may be found to be payable you on submission of final return furnished by you.

You are required to pay the following amounts on or before 04/03/2022 failing which the amount will be recovered in accordance with the provisions of the Act and rules made thereunder.”

3. We have heard Ms. Manvi Damle, the learned counsel appearing for the writ applicant and Mr. Utkarsh Sharma, the learned AGP appearing for the respondents.

4. On bare perusal of the the contents of the show cause notice as well as the impugned order, we find that the said show cause notice is absolutely vague, bereft of any material particulars and the impugned order is also vague and a non­speaking order. We quash and set aside the impugned order dated 22.02.2022 and remit the matter to the respondent No.2 for denovo proceedings in accordance with law. In view of the fact that we have quashed the order of cancellation of GST registration, the GST registration stands revived.

5. With the aforesaid, this writ application stands disposed of.