Gujarat HC: GST Reg. Cancellation Order is Invalid Without Any Specifying Reason

In a recent ruling, the Gujarat High Court said that the rejection instruction of Goods and Service Tax registration without giving the reason is inaccurate.

Mr Pranav Trivedi and Mr Uchit Sheth were the counsel for the respondent and the petitioner respectively.

The petitioner, Om Trading, operates the business of trading in base oil. He said that their business is registered under the Goods and Services Tax Act, 2017 and the respondent authority has provided the petitioner a registration certificate.

The petitioner submitted that he purchased and sold goods in their regular course of business, and these transactions were duly recorded in their returns. It was indicated that the authority that made up the second respondent had posted a Show-cause notice on the GST site on November 24, 2021, intending to revoke their registration under the Act.

The grounds cited for this proposed cancellation were the alleged use of fraudulent means, willful misstatement, or suppression of facts in obtaining the registration.

The petitioners, however, were not logged in to the GST portal and therefore remained unaware of the notice’s issuance. They also did not receive any supporting documents for the notice.

On the other hand, while the respondents tried to oppose the petition, submitted that based on written notice, no speaking order had been passed at the time of GST registration cancellation.

Hence, if the authority invalidates the order and allows the authority to initiate fresh proceedings in accordance with the law, the concerned officer has no objection to it.

It became apparent that the respondent authority did not argue the fact that they had failed to provide the necessary documents when issuing the show-cause notice for registration cancellation. Furthermore, the notice itself was cryptic and lacking in detail, which made it impossible for the petitioners to provide a response.

It was argued that the impugned order for registration cancellation lacked reasoning, as the respondent authority did not provide any justification for their decision. Consequently, the order was deemed to be invalid.

The appeal was subsequently upheld by a two-judge panel consisting of Justice Vipul M Pancholi and Justice Devan M Desai, who set aside and invalidated both the Show-cause notice and the order.