A Single Bench of the Allahabad High Court has cancelled and set aside the cancellation of GST registration executed on the basis of the firm being alleged to be fake.
The applicant’s opinion of the council is that he has the registered proprietorship firm along with executing the business as per the statutory. The applicant has revised its business address dated 15.12.2020 and for the concern, the applicant has proceeded with the revision application which was authorized by the council dated 9.02.2021.
A search was performed via the department on the date 3.01.2021 at the former location of the business and it revealed that there is no firm running its operation from the registered place. The applicant stated that a show cause notice was issued dated 11.2.2021 (Annexure No.3) in which the same was alleged that the enrollment is obligated to get abolished on the foundation of the obtained data via STF that there exists no firm running its operation at the registered location.
The same was specified that in absence of the answer to the show cause notice on 11.02.2021, the firm’s enrollment was abolished on 31.03.2021 which cancelled the enrollment on the basis that according to the obtained data the company was indulged in claiming the bogus ITC credit via the fake firm.
The Counsel’s contention for the applicant was that the revocation of the registration could be resorted to exclusively when the conditions mentioned in sub-section 2 of Section 29 of the GST Act are drawn.
Pranjal Shukla the counsel for the applicant contented, there is no clause as enumerated in section 29(2) and as recorded above the non-claiming of the input tax credit as is alleged against the applicant could be the foundation for the cancellation. Subsequently, it argued that in the show cause notice the mere argument levelled was that there is nothing revealed in the premises in question.
There is nothing revealed at the time of the search in the firm that was suspect, the counsel for the respondent contented and the approval laid through the applicant was next to the search as he contented that it is an afterthought.
The single bench of Justice Pankaj Bhatia sees that as the same might from the perusal of the issued order in appeal and the order cancelling the enrollment, it is clear that the respondents would commit the error at the time of deciding the problem on the basis that various firms were claiming the wrong ITC credit and were fake firms.
It observed that “in the case of Apparent Marketing Private Limited (Supra) has already dealt with the said issue and has recorded that once registration is granted, the same could be cancelled only in terms of the conditions prescribed under Section 29(2) and allegedly being a bogus firm is not a ground enumerated under Section 29(2).”
The Allahabad High Court thus held that “following the said judgment and coupled with the fact that the respondents themselves have initiated proceedings against the firm under GST Section 74, the order rejecting the application for revocation was a wrong exercise of power by the department. The appellate order is equally bad, inasmuch as, no such ground was mentioned before passing the order of cancellation and, thus the impugned orders 17.05.2021 and 14.09.2021 are set aside.
| Name of Applicant | M/S Shyam Sundar Sita Ram Traders vs State Of U.P. And 2 Others |
| Case : | WRIT TAX No. – 991 of 2021 |
| Date | 20.03.2023 |
| Counsel for Appellant | Pranjal Shukla |
| Counsel for Respondent | C.S.C |
| Allahabad HC | Read Order |
