A division bench of the Gujarat High Court has overturned a decision to revoke a company’s GST registration on the grounds that the show-cause filing lacked sufficient justification.
The Central GST Department conducted a search at the petitioners’, M/s Dee Cubes Diamonds Pvt Ltd., location. The government issued a notice to terminate the GST registration after alleging the petitioner’s wrong claim of the Input Tax Credit (ITC) under the GST Act.
The petitioner’s attorney, Shri Uchit N. Sheth, argued that the decision revoking the registration certificate dated 11.10.2022 is arbitrary, outside the purview of a show-cause notice, and in violation of natural justice principles. He further claimed that the show-cause notice was unlawful since it was silent and lacked any justification.
Justice Sonia Gokani and Mrs Justice Mauna M. Bhatt see, no valid reason was given for the cancellation of GST registration.
The High Court ruled that despite requests for specifics, none were given and that the petitioners’ initial response had not been taken into account when it quashed the challenged judgement and ordered a new judgement. In my opinion, the show-cause notice dated May 26, 2022, omits to state the basis for the claim of improper use or availing of the Input Tax Credit (ITC) or tax refund. The show-cause notice violates the laws of natural justice since it gives no justification for the respondent’s behaviour.
Read Order: HC Cancels Proceedings Based On the Contradiction Between SCN & Order
As this Court noted in Aggarwal Dyeing (Supra), the reasons are the heart and soul of the ruling, and failing to communicate them amounts to denying a fair opportunity to be heard, which results in injustice. Applying the same logic, the show-cause notice dated May 26, 2022, which is devoid of any justification, merits to be quashed and set aside and is therefore quashed and set aside.
