Allowed

M/S R.H. Enterprises Gonda Thru. Its Proprietor Shubham Singh v. State of U.P. Thru. Prin. Secy. Deptt. of State Tax, Civil Sectt. Lko. and 2 Others

Allahabad HC27 May 2024WTAX/141/2024

Case brief

AI extract

What is this about?

The High Court quashed orders cancelling the petitioner's GST registration. It held that the cancellation order was passed on the dictation of a superior authority without independent application of mind, and the authority failed to provide material relied upon for natural justice.

What did the court decide?

Impugned orders dated 04.04.2024 and 03.05.2024 directing cancellation of GST registration are quashed. Authority is at liberty to initiate proceedings after complying with natural justice.

M/S R.H. Enterprises Gonda Thru. Its Proprietor… — Banking and Recovery | Allahabad HC (2024)

¶1

Neutral Citation No. - 2024:AHC-LKO:41378

¶2

Court No. - 19

¶3

Case :- WRIT TAX No. - 141 of 2024 Petitioner :- M/S R.H. Enterprises Gonda Thru. Its Proprietor Shubham Singh

¶4

Respondent :- State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax, Civil Sectt. Lko. And 2 Others Counsel for Petitioner :- Mukesh Kumar Tewari Counsel for Respondent :- C.S.C.

¶5

Hon'ble Subhash Vidyarthi,J.

¶6

Heard Sri S.C. Mishra, Senior Advocate, assisted by Sri Mukesh Kumar Tewari, the learned counsel for the petitioner, Sri Sanjay Sarin, learned Additional Chief Standing Counsel for the State and perused the record.

¶7

By means of the instant writ petition filed under Article 226 of the Constitution of India, the petitioner has challenged the validity of an order dated 04.04.2024 passed by the Assistant Commissioner, State Tax, Sector-3, Gonda, cancelling the petitioner's registration under Section 29(2) of the Central Goods and Service Tax Act (C.G.S.T Act). The petitioner has also challenged the validity of an order dated 03.05.2024 passed by the Additional Commissioner, Grade-2, (appeals) State Tax, Gonda, dismissing the appeal which was filed by the petitioner against the aforesaid order dated 04.04.2024.

¶8

Briefly stated, facts of the case are that the petitioner - M/S R.H. Enterprises Gonda, is registered under the provision of UPGST Act, 2017. On 09.02.2024, a notice was issued to the petitioner directing it to show cause as to why its registration be not cancelled for the following reasons:-

¶9

"(i) returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017

¶10

(ii) outwards supplies details furnished by you in FORM GSTR1

¶11

(iii) auto-generated details of your inward supplies for the period 01.04.2023 to 31.12.2023."

¶12

The petitioner submitted its reply in response to the show cause notice on 17.02.2024 and upon consideration of the same, the Assistant Commissioner passed an order dated 19.02.2024 dropping the proceedings for cancellation of the registration and suspension of registration stood revoke with effect from 19.02.2024.

¶13

Another notice was issued on 18.03.2024 to the petitioner directing it to show cause as to why its registration be not cancelled for the following two reasons:-

¶14

"(i) Rule 21(a)-person does not conduct any business from declared place of business.

¶15

(ii) The letter No. 316 dated 16.03.2024 received from DGGI Lucknow Unit according to which the firm found Non Existant."

¶16

The petitioner was directed to submit a reply to the show cause within a period of seven days and meanwhile his registration was suspended with effect from 18.03.2024. The show cause notice further states that " kindly refer the supportive document attached for case specific details- Not Applicable "

¶17

The petitioner again submitted a reply inter alia stating that after considering its reply to the earlier show cause notice, the proceedings for cancellation of GST registration had been dropped. The petitioner's vehicle had been detained by mobile squad of the department on two occasions i.e on 26.12.2023 and

¶18

19.07.2023 and the petitioner had deposited the amount in

¶19

respect thereof.

¶20

On the basis of aforesaid statements, the petitioner contended that the allegation that it was not conducting any business, was incorrect and its GST registration could not be cancelled. The petitioner also referred to an earlier order dated 28.1.2022, whereby a notice issued under Section 61 of the GST Act was dropped after accepting the reply submitted by the petitioner. Another proceeding for cancellation of the petitioner's registration had been initiated by a show cause notice dated 28.10.2021 and the same were dropped of by an order dated 28.1.2022.

¶21

After submission of the petitioner's reply, the Assistant Commissioner, State Tax, Sector-3, Gonda had passed the impugned order wherein it is stated that the Additional Commissioner, Grade-1, State Tax, Ayodhya Zone, Ayodhya has posted a message on WhatsApp group and has issued a letter dated 19.3.2024 referring to a letter dated 16.03.2024 issued by D.G.G.I. (Director General GST Intelligence)-Zonal Unit, Lucknow directing immediate cancellation of the petitioner's GST registration. The order states that the petitioner's GST registration was suspended in furtherance of the aforesaid direction issued by the Additional Commissioner, Grade-1, State Tax, Ayodhya Zone, Ayodhya. The Assistant Commissioner referred to the report of D.G.G.I. and the Punchnama annexed therewith, from which it appears that the main place of business of the petitioner is LIC Colony, Patel Nagar, Gonda and the father of the petitioner's proprietor Shri Anil Singh admitted that this place is the residential house of Shubham Singh and he had no knowledge regarding the place where the commercial activities of the firms were conducted.

¶22

On the basis of the aforesaid findings, the D.G.G.I. recommended cancellation of the petitioner's GST registration. The order states that the petitioner has not given any clarification on the aforesaid recommendations made by the D.G.G.I.

¶23

The petitioner filed an Appeal against the order dated 4.4.2024, which has been dismissed by Additional Commissioner, Grade-2 (Appeal).

¶24

While assailing the validity of the aforesaid orders, the learned counsel for the petitioner has submitted that when a show cause notice dated 9.2.2024 was issued for cancellation of the petitioner's GST registration on certain reasons mentioned in the notice and finding the petitioner's reply to be satisfactory, the proceedings for cancellation of GST registration of the petitioner were dropped by means of an order dated 19.02.2024, issuance of a fresh show cause notice on 18.03.2024 on a new set of allegations, is unreasonable. Further, the show cause notice dated 18.03.2024 refers to a letter dated 16.03.2024 received from D.G.G.I. Lucknow Unit, according to which the firm was found to be non existing but regarding supportive documents attached for case specific details, the notice merely states "not applicable".

¶25

In the reply submitted to the show cause notice, the petitioner had referred to the earlier proceedings for cancellation of the petitioner's GST registration having been initiated and dropped after finding petitioner's reply to be satisfactory and also to the petitioner's vehicles being detained by the mobile squad on two occasions i.e. on 26.12.2023 and 19.07.2023 and the petitioner having been made to deposit the amount, from which it appears that the allegations that the petitioner is not conducting any business, is false.

¶26

Per contra, learned Additional Chief Standing Counsel has submitted that the petitioner has annexed a copy of the Punchanama dated 8.2.2024 prepared by the officials of D.G.G.I., which records that no business was being carried out at the place of business of the petitioner.

¶27

When a show cause notice was issued to the petitioner on the basis of a letter dated 16.03.2024 issued by D.G.G.I., Lucknow, it was imperative for the authority to have provided a copy of the aforesaid letter dated 16.03.2024 to the petitioner to enable it to effectively defend itself. The requirement of principles of natural justice will be made only when the person affected is given a proper opportunity of hearing, which requires that the person concerned should be communicated the allegations against him and the material relied upon in support of allegation. The failure of the authority to provide a copy of the letter dated 16.3.2024 to the petitioner, denies adequate opportunity of hearing to the petitioner. Further, a bare perusal of the impugned cancellation order dated 04.04.2024 indicates that the Assistant Commissioner, State Tax, Sector-3 Gonda has started the order with the narration that he had been directed by the Additional Commissioner, Grade-1, State Tax, Ayodhya Zone, Ayodhya to immediately cancel the GST registration of the petitioner. Additional Commissioner, Grade-1 is an officer higher in rank to the Assistant Commissioner, State Tax - the authority which has passed the cancellation order and he is an officer even higher in rank than even the appellate authority Additional Commissioner, Grade-2 (Appeal), State Tax, Gonda. The order of cancellation of GST registration passed on the instructions of a higher Authority, cannot be said to be an order passed by the authority after independent application of its mind. The order passed on a dictates of its superior authority, cannot be an order passed by an authority after independent

¶28

application of its mind.

¶29

Although, the show cause notice was not accompanied by a copy of the letter of the D.G.G.I., the Assistant Commissioner, State Tax, Sector-3, Gonda stated in the impugned order dated 4.4.2024 that the petitioner did not render any clarification on the points on which D.G.G.I. had conducted an inquiry. In absence of points on which D.G.G.I. had made its inquiry and in absence of the findings of the inquiry having been communicated to the petitioner, the petitioner could not be expected to give any clarification on the points of inquiry conducted by the D.G.G.I.

¶30

I am of the considered view that in view of the aforesaid discussion, the impugned orders dated 04.04.2024 and 03.05.2024 are unsustainable in law.

¶31

Accordingly, the writ petition is allowed and the orders dated 04.04.2024 passed by the Assistant Commissioner, State Tax, Sector-3, Gonda and order dated 03.05.2024 passed by the Additional Commissioner, Grade-2, (appeals) State Tax, Gonda are hereby quashed .

¶32

The authority shall be at liberty to initiate proceedings for cancellation of G.S.T registration of the petitioner in accordance with law, after complying with the principles of natural justice in letter and spirit.

¶33

(Subhash Vidyarthi,J.)

¶34

Order Date :- 30.5.2024 Preeti.

¶35

Digitally signed by :- PREETI GAUTAM High Court of Judicature at Allahabad, Lucknow Bench

M/S R.H. Enterprises Gonda Thru. Its Proprietor Shubham Singh v. State of U.P. Thru. Prin. Secy. Deptt. of State Tax, Civil Sectt. Lko. and 2 Others

Case brief

What is this about?

What did the court decide?

M/S R.H. Enterprises Gonda Thru. Its Proprietor Shubham Singh v. State of U.P. Thru. Prin. Secy. Deptt. of State Tax, Civil Sectt. Lko. and 2 Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Sanjay Kumar Jha Vs Union of India Thru. Directorate of Enforcement Thru. Assistant Director

Vikki Mishra Alias Adarsh Mishra Vs State of U.P. Thru. Prin. Secy. Dept. Home Lko.

Shiv Kumar Singh S/O Jagat Pal Singh Objection Filed Vs State of U.P. Thru D.M./Collector Shrawasti and Anr.

M/S Maa Kamakhya Traders Ropahihut,Nagawn,Asam,Delhi Thru. Prop. Vinod Maurya Vs Union of India Thru. Secy. Minister of Finance,New Delhi and 3 Others

Neelam Kaushal Vs State of U.P. Thru. Prin. Secy. Home Lko

Mohan Kumar Vs Govt. of India Thru. Assistant Director Directorate of Enforcement