2023 (8) TMI 393 - HC - GST

Cancellation of registration of petitioner - vague SCN - SCN bereft of particulars - Bald allegations - HELD THAT - There are merit in the contention that the impugned SCN is bereft of any particulars. The allegations made were bald and not capable of eliciting any meaningful response. It is settled law that a show cause notice must clearly set out the reasons for proposing the adverse action to enable the noticee to respond to the same. In the present case impugned SCN does not provide any clue as to why the petitioner s registration was sought to be cancelled. Apart from making a bald allegation that it had been obtained by means of fraud and wilful misstatement no particulars are provided. The impugned SCN does not disclose the fraud alleged or the statement alleged to be a misstatement. It provides no clue as to which facts have been allegedly supressed by the petitioner. The impugned Order-in-Original dated 04.10.2022 also does not set out any detailed reasons for cancellation of the registration - it is conceded that the impugned SCN is inchoate and did not indicate the detailed reasoning for proposing an adverse action. The impugned SCN cannot be sustained. Petition allowed.

Summary

Issues involved:
The cancellation of GST registration due to alleged fraud, wilful misstatement, or suppression of facts without providing detailed reasons in the show cause notice (SCN) and subsequent orders.

Impugned Order-in-Original and Order-in-Appeal:
The petitioner challenged the Order-in-Original dated 04.10.2022, which cancelled the GST registration from 21.08.2017, and the Order-in-Appeal dated 28.02.2023, which rejected the appeal against the original order for being filed beyond the limitation period. The SCN issued on 18.08.2022 proposed cancellation based on fraud, wilful misstatement, or suppression of facts without providing specific details.

Validity of the Show Cause Notice (SCN):
The High Court found that the impugned SCN lacked specificity as it did not clearly outline the reasons for proposing cancellation, making it impossible for the petitioner to respond meaningfully. The court emphasized that a proper SCN should disclose the alleged fraud or misstatement to enable a proper response.

Lack of Details in Orders:
Both the impugned Order-in-Original and Order-in-Appeal failed to provide detailed reasons for the cancellation of registration. The Order-in-Original cited non-response to the SCN as the sole reason, while the Order-in-Appeal mentioned the change in the principal place of business without proper amendment on the GST portal, without elaborating on the alleged violations.

Failure to Consider Explanations:
The petitioner had submitted an explanation regarding the change in the principal place of business, but it was not considered in the decision-making process. The court noted that the authorities did not adequately address the petitioner's submissions before taking adverse actions.

Technical Glitch and Inadequate Disclosure:
The respondent claimed that detailed reasons for cancellation were uploaded but not visible to the petitioner due to a technical glitch. However, the court held that this lack of visibility rendered the SCN incomplete and insufficient in providing the necessary information for the petitioner to respond effectively.

Court's Decision and Directions:
Considering the deficiencies in the SCN and subsequent orders, the High Court set aside the impugned orders and the SCN. It allowed the petition, directing that if the respondent intends to take further adverse action, a fresh show cause notice with detailed reasons must be issued, ensuring the petitioner's right to be heard before any such action is taken.