Allowed

M/s Dnc Infrastructure-Private Limited v. The Superintendent

Telangana HC11 Dec 2023WP/31974/2023

Case brief

AI extract

What is this about?

The High Court of Telangana allowed a writ petition in the nature of mandamus and quashed the order cancelling the petitioner's G.S.T. registration issued on grounds not reflected in the impugned order, directing restoration of the registration.

What did the court decide?

Quashed the cancellation order dated 25.08.2023 and directed the authorities to forthwith restore the petitioner's G.S.T. registration.

M/s Dnc Infrastructure-Private Limited Vs The… — GST and Indirect Tax | Telangana HC (2023)

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HIGH COURT FOR THE STATE^OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

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MONDAY ,THE ELEVENTH DAY OF^DECEMBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI

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WRIT PETITION NO: 31974 OF 2023

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Between:

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tr/is DNC INFRASTRUCTURE-PRIVATE Lll\rlTED,^{K.Square,H.No.1-611,} Plot No. 115, 4th Floor, Madhapur Road,^{Hyderabad,State of Telangana.} Rep. by its Managing Director Mr.^{D.Naresh Chowdary.}

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...PETITIONER

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AND

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1 The Superintendent, Madhapur-lV-Circle,^{HyderabadRural GST Range,} Hvderabad. The Principal Commissioner of Central^{Tax,HyderabadCommissionerate,} GST Bhavan, L.B. Stadium, Basheerbagh,^Hyderabad.

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3 The Union of lndia, Represented^{by its} Secretary,^{tvlinistryof Finance, Central} secretariat' New Delhi'

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...RES'.NDENTS

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Petition under Ariicle 226 of the^{Constitutionof lndiapraying that in the} circumstances stated in the affidavit^{filedtherewith, the High Courtmay be} pleased to issue a Writ in the nature of Mandamus or any olher appropriate^writ or order or direction by declaring the^{action of the 1't respondent in cancelling} the registration of the^{petitioner under the GST Act 2017 and not revoking the} same despite of filing all the^{pending returnsas illegal, arbitrary, high handed,} without authority of law and^{jurisdiction,vitiated on accountof violation of} principles of natural^justice and also in violation of^{Article 19 and 21 of the} Constitution of India and consequently^{set aside the impugned proceedings of} the lstrespondent daled^251812023

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lA NO: 1 OF 202 3

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Petition under Section 151 CPC^{prayingthat in the circumstancesstated} in the affidavit filed in support of the^{petition, the High Court may be pleased to}

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suspend the^{operationof the impugned order of cancellation of registration} passed by the 1't^{respondent dated 25tBt2O23in FORM- GST-REG-1€l pending} disposal of^{the writ petitionas otherwisethe petitioner would be put} to irreparable^{Ioss and hardshiP'}

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Counsel for^{the Petitioner: SRI' V' SIDDHARTH REDDY}

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Counsel for^{the Respondent Nos'1&2:SRI DOMINIC FERNANDES} (senior standing counsel^{for CBIC)}

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Counsel for^{the Respondent No'3:SRI GADIPRAV-E-ENKUMAR'} DY. SOLICITOR^{GENERALOF INDIA}

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The Court made^{the following:ORDER}

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)

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THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI

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WRIT PETITION No.31974 OF 2o23

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ORDER:/per Hon'ble Si Justice P.SAM KOSHY)

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The order under challenge in the present Writ Petition is the order of cancellation of G.S.T. registration of the petitioner - M/s.DNC Infrastructure Private Limited uide the order, dated 25.O8.2023 (Annexure-P 1) .

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The learned senior counsel appearing for the petitioner submits that the impugned order of cancellation of Goods and Services Tax (for short "G.S.T.") registration has been done based upon the show cause notice issued on O2.O7.2O2O. Referring to the said show cause notice, dated 02.O7.2O2O (Annexure-P2), the learneci senior counsel for the petitioner submits that the default pointed out in the said show cause notice was only non-filing of the returns for continuous period of six (6) months, for which explalation was called for within seven (7) days. The contention of the learned senior counsel is that immediately on receipt of^the said show cause notice, the petitioner had immediately^taken necessary steps and have hled entire returns up tiil^date.

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PSK,J &.WR,J W.P.No.31974 oJ 2023

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At this^{juncture,the learned senior counsel for the petitioner} submits that the^{date of the show cause notice itself rvould} reveal that it was^{issued during peak COMD-19 pandemic} period i.e., J u|y , 2O2O and it^{was in the said prevailing} circumstances which^{prevented the petitioner in submitting} the returns timely.

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It is the further contention^{of the learned senior counsel} for the petitioner that^{subsequentlyrealizing the ground} realities, the Government^{of India itself had issued circulars} for extending the time for^{submissionof returns and the} returns were subsequently^{submitted within the extended} period of time. Yet, the respondents^{continued to pursue} with the saicl show cause^{notice and the irnpugned order now} has been passed on 25.08.2023,^{after more than thtee (3)} years inspite of the fact that the^{petitionerhad submittedthe} entire returns within the extended^{period as wasextencled by} the Government of india.^{Thus, the action on the part of the} respondents in cancelling the^{G.S.T. registration basedrln the} sho'"r, cause notice, dated O2.O7.2020^{was totallyerroneous,} arbitrarv and also bad in law.

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PSK,J & NTR,J W,P.No.37974 of 2O23

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)

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The learned senior counsel further contended that pursuant to the cancellation of G.S.T. registration, the petitioner had approached the respondent authorities, under Section 30, Rule 23 of the Centra-1 Goods and Services Tax Act, 2Ol7 (for short "C.G.S.T. Act, 2077"1 seeking for revocation of the cancellation of registration, highlighting these very facts which again is pending consideration before the authorities concerned for a positive decision. The learned senior counsel for the petitioner further submits that in terms of the provisions of 1aw, a decision on the revocation application frled by the petitioner has to be taken within a period of one (1) month from the date of its submission, which period also is now crossed without a decision on the part of the respondent authorities.

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At this juncture, the learned senior counsei for the petitioner submits that inspite of the revocation application under consideration before the respondent authorities and also the fact that the present Writ Petition was frled as eariy as on 16.11.2023, the learned counsel appearing for the Department has taken time on repeated occasions to seek instructions from the Department on the contentions stated

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PSK,J & MTR,J W.P.No.37974 of 2O23

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by the learned senior counsel for^{the petitioner reflectedin} the precedir-rg paragraphs.^{No instructionswere soughtby} the learned Senior Standing counsel for^{the Department. On} the contrary. the Deputy Commissioner,^{Gachibowli, G.S.T.} Division, hacl recentiy issued a letter on^{05.12.2023t:alling} upon the petitioner for^{personal hearingon 10. 12.2023 at} 10:30 A.M. This, according to the learned senior^counselwas done with a malafide intention to^put coercion on^the petitioner on his approaching this Court by way of the present Writ Petition. He further submits that the date of personal hearing was again hxed on 10.12.2023 kn.owing fully well that it was a Sunday. Inspite of that, the^petitioner went to the oilice and he found that it was closed^{and l.ocked} as it rvas a Sundav. Therefore, no development as^such transpired on the date of hearing fixed by the^Deputy Commissioner, Gachibou,li, G.S.T. Division. He submits^that the said notice for personal hearing is uncalled^for '^Vide Annexure-PI, dated 25.08.2023, the G.S.T. registration^{of the} petitioner already stands cancelled and there could not^have been further personal hearing post the cancellation^order having been passed and on this ground also the said^order is

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PSI(,J & MTR,J W.P.No.37974 oJ 2023

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bad. He further submits that if at all personal hearing was to be issued it should have been issued, by the same authority who had cancelled the registration, however, it has been issued by another higher authority in rank i.e., Deputy Commissioner, Gachibowli, G.S.T. Division, which is not permissible under law.

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At this juncture, the learned Senior Standing Counsel for the Department submits that he has instructions from respondent No.2 that the canceilation of G.S.T. registration in fact was not on account of the default on the part of the petitioner in not furnishing its returns continuously for a period of six (6) months or in terms of the show cause notice, dated O2.O7.2O2O. According to the Iearned counsel for the Department, the cancellation in fact has been initiated on the ground of the petitioner having fraudulently availed I.T.C. and passed it on further and the amount of LT.C. availed by the petitioner is to ttre tune of Rs.31 Crores and it was in this context that the proceedings were drawn, but erroneously the cancellation order reflects the cancellation having been done on the grounds reflected in the show cause notice, dated O2.O7.2O2O. There are no instructions so far as the notice of

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PSK,J & NTR,J W.P.No.37974 of 2023

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personal hearing, dated 05.12.2023 issued by the^Deputy Commissioner, Gachibowli,^{G.S.T.Division, is concernecj..}

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Having heard the contentions^put forth on either^side, what is apparently evident that though the^{Departmenthas} been granted couple of opportunities to^seek instructions,^the only oral instructions received^{by the learned counsel for the} Department is to the extent that the order^{of cancellation} does not seem to be on the^grounds which^{were otherwise} there in the show cause notice, dated O2.O7.2020, but^{on the} ground of the petitroner having fraudulently avarled^{I.T.C. to} the tune o[ Rs.31 Crores. The learned senior^standing counsel for the Department in this regard^{referred 1o the} correspondence rcceived from the Department,^dated 30.05.2023.

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So far as this Bench is concerned, all that^{we need to} consider is the veracrty of the impugned order in^{the pr:esent} Writ Petition. The impugned order is the one of cancellation of G. S.T. registration.

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9 . A Plain reading of the impugned order clearly reflects that the said action is in^reference to the^{shorv cause notice,}

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PSK,J & NTR,J W.P.No.37974 of 2O23

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dated, O2.O7.2O20. The said show cause notice is also enclosed as Annexure-P2 in the present Writ Petition. The said show cause notice is only so far as default on the part of the petitioner in non-furnishing the returns continuously for a period of six (6) months.

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Admittedly, if the contention of the petitioner is to be accepted, the show cause notice itself was issued during the peak COVID-l9 pandemic period when the entire Country was under lockdown for a considerable period of time. The entire business world itself had come to a stand still. Realizing this fact, the Government of India had extended the time for the tax payers to file their returns within extended period of time and the petitioner has submitted its returns within the extended period which stood extended by the Government of India. This fact was brought to the notice of the authorities concerned also.

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What is also apparent from the pleadings is that from O2.O7.2O2O tiII the impugned order, dated 25.08.2023 was passed, there does not seem to be any further transaction or correspondence made in this regard inter se between the petitioner ald the Department. I

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.)---':' ' '::t-.

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PSI(,J & IVTR,J W.P.No.37974 o-f 2O23

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So far as the default on the^part of the^petitioner in^not frling returns within the stipulated^period of time in terms of the Income Tax Act, 1961 at the relevant^point of time^is concerned, the impugned order does not in any manner deal with the fact that the petitioner has subsequently subrritted the returns a-fter the show cause notice having been issued on O2.O7.2020 and the default pointed out in the show cause notice stood cured and rectified. Thereafter, there was no such default on the part of the petitioner so far as nonfurnishing of returns upto April, 2O23.

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The impugned order to the aforesaid extent is totally without any reason nor can it be said to be a speaking order so as to hold the said action on the part of the respondents to be proper, legal and^justified. Moreover, even subsequent to the cancellation order having been passed, the petitioner has availed the statutory remedy available to it under Sectron 30 of the C.G.S.T. Act, 2077, seeking revocation cf the cancellation which too has been pending. The respondents does not seem to be in a mood to take a decision in the revocation application either in the affrrmative or negative, though the statute provides for a decision on the same within

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PSK,J & NTR,J W,P.No.3 7974 of 2O23

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a period of one (1) month from the date of the application for revocation is filed.

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The respondents on the contrar5r seem to be bent upon taking coercive steps on the petitioner, as would be evident from the correspondence, shown to this Bench by the petitioner today, dated 05.12.2023 issued by Sri K. Nagaraju, Deputy Commissioner, Gachibowli, G.S.T. Division, which is in total contravention to the^provisions of law.

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The notice, dated 05.12.2023 seems to be issued again for personal hearing. So far as the cancellation of registration is concerned, once when the cancellation of registration having been done way back on 25.08.2023 and the said order being a fina,l order, there could not have been another^ietter issued by the Department calling upon the^{petitionerfor} personal hearing. The said action on the part of the Department amounts to^post decision hearing which in^the above factual backdrop is unacceptable in^{the eyes of law.}

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In the given factual background of the case,^{as regards} the contentions raised by the learned counsel for^the

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PSK,J & NTR,J W,P.No.37974 of 2O23

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Il I I I I I

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a-,]

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Department so far as the alleged frauduient act of^the petitioner availing fraudulent I.T.C. to the tulle of Rs.31 Crores is concerned, the plain reading of the^{orCer of} cancellation does not reflect any such^{allegationagainst the} petitioner. On the contrary the order of cancellation references to the show cause notice, dated 02.O7.2O20^alone. The order of cancellation, dated 25.08.2023 shows that^there was substantial period of time of more than three^{(3) years} at the hands of the respondents, during which^period they could have taken appropriate steps against the^petitioner, if at ail they intended to do so. So far as the so-called frau<lulent availing of I.T.C. is concerned, the impugned order does not reflect aly of these developments that have transpired rluring the interwening said three (3) years period.

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In the given factual backdrop, particularly taking into consideration the submissions made by the learned senior counsel for the petitioner that after the show cause notice having been issued, taking advantage of the circuiar of the Government of India extending the time of furnishirLg the returns, the returns have already been filed by the^petltioner within the extended period of time, we are finding it difhcult

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PSK,J & MTR,J W.P.No.31974 of 2O23

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{ I

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to sustain the impugned order (Annexure-P1), dated

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25.O8.2023. On this very ground alone, the impugned order, therefore, is not sustainable and the same deserves to be and is accordingly set-aside/quashed. The respondent authorities are directed to forthwith restore the G.S.T. registration of the petitioner.

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So far as letter, dated 05.12.2023 is concerned, it is expected that the Commissioner, Ranga Reddy Commissionerate would take note of the letter, dated 05.12.2023 and look into the aspect as to whether this letter of personal hearing post the order, dated 25.08.2023 of cancellation of G. S.T. registration having been passed was warranted or not. If at all, the said order is an order of personal hearing post the order, dated 25.O8.2023, then, in the light of allowing of the present Writ Petition, the letter, dated 05.12.2O23 automatically loses its eflicacy

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Accordingly, the Writ Petition stands allowed with the aforesaid direction and observations. There shall be no order as to costs.

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PS}(,J & ]v?R,J W,P,No.31974 of 2023

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Consequently, miscellaneous petitions pending,^j.f any

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shall stand closed.

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sdtK.vENKArAH ASSISTANT REGIS,TRAR / //TRUE COPY// ty./

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SECTION OFFICER

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To,

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The Superintendent,^{Madhapur -lV-Circle, Hyderabad Rural GST Range,} Hvderabad.

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Tlie Principal^{Commissionerof Central Tax, Hyderabad Commissionerate,} GST Bhavan,^{L.B. Stadium,Basheerbagh, Hyderabad.}

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ihe Secretaiy,^{Unionof lndia, Ministry-of Finance, CentralSecretariat'New} Delhi

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One CC to^{SRI. V.} SIDDHARTH^{REDDY, Advocate} [OPUC]

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One CC to SRl.^{DOMINICFERNANDES (senior standing counselfor} cBrc) [oPUC]

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ONC CC tO SR[, GADI^{PRAVEEN KUMAR, DY. SOLICITOR GENERALOF} INDIA IOPUC]

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Two CD Copies

9.^BM

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CC TODAY

HIGH COURT

DATED:1 111212023

ORDER

WP.No.31974 of 2023

I HE STAT
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ALLOWING THE WRITPETITION WITHOUT COSTS

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M/s Dnc Infrastructure-Private Limited v. The Superintendent

Case brief

What is this about?

What did the court decide?

M/s Dnc Infrastructure-Private Limited v. The Superintendent

Case brief

What is this about?

What did the court decide?

What the court decided

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