2025 (5) TMI 1278 - HC - GST

Recalling of order - Validity of the Orders obtained on the basis of the said fabricated SCNs - GST Registration retrospectively cancelled - Identifying the culprit who fabricated the SCN - HELD THAT - In fact the actual SCN is extremely detailed and gives the full reasoning for issuance of the same. It is further stated by the Department that the relevant paragraphs containing the remarks are missing from the SCN which forms a part of the subject petition filed by the Petitioner. The Court prima facie is of the opinion that this is a serious matter where the show cause notice has clearly been fudged with an intent to obtain a favourable order by this Court. Ld. Counsel for the Petitioner submits that he has issued notice to the client however the client has not contacted him since after the filing of the review petition. Under these circumstances the following directions are issued i. The order passed by this Court disposing of the subject petition dated 27th February 2025 is recalled. ii. Non-bailable warrants are issued for production of the Petitioner who has deposed the affidavit dated 24th February 2025 in the subject petition filed before the Court. iii. The non-bailable warrant shall be executed by the SHO of the concerned area. iv. The non-bailable warrant shall be executed through Mr. Sanjay Lao ld. Standing Counsel (Criminal) for the Government of NCT of Delhi. v. The Petitioner shall be produced before the Court on the next date of hearing. Further Mr. Jain ld. Counsel for the Petitioner directed to file an affidavit as to who were the individuals who gave him the SCN which was annexed with the petition and forms the basis of the impugned order passed by this Court while disposing of the subject petition. The subject writ petition is restored to its original number.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

(a) Whether the retrospective cancellation of the GST registration of the Petitioner was validly effected in the absence of a reasoned show cause notice (SCN) and prior notice to the Petitioner.

(b) Whether the SCN annexed to the writ petition was genuine or forged, and the implications of any forgery on the validity of the impugned order.

(c) Whether the order dated 27th February, 2025, which granted interim relief to the Petitioner by modifying the retrospective cancellation date, should be reviewed and recalled in light of the alleged forgery.

(d) The procedural propriety and consequences of issuing non-bailable warrants against the Petitioner for production before the Court in connection with the affidavit filed in support of the writ petition.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Validity of Retrospective Cancellation of GST Registration Without Reasoned SCN

Relevant Legal Framework and Precedents: The GST Act, specifically Section 29(2)(e) of the CGST Act, 2017, empowers the tax authorities to cancel GST registration suo moto if the taxpayer is found non-existent or non-traceable at the registered address. However, principles of natural justice require that any such cancellation, especially retrospective in nature, be preceded by a reasoned show cause notice and an opportunity to be heard.

Court's Interpretation and Reasoning: The Predecessor Bench had earlier held that the SCN dated 27th September, 2024, was non-reasoned and failed to place the Petitioner on prior notice of the intent to cancel registration retrospectively. The Court observed that such absence of reasons and prior notice invalidated the retrospective cancellation action. Consequently, the Court modified the cancellation date to the date of the SCN itself, quashing the retrospective effect from 25th November, 2021.

Key Evidence and Findings: The SCN annexed to the writ petition was found to lack the "Remarks" paragraph explaining the basis for retrospective cancellation, which was critical for justifying the action. The absence of such reasoning was pivotal in the Court's initial decision to grant relief.

Application of Law to Facts: The Court applied the principle that retrospective cancellation without a reasoned SCN violates the requirement of fair procedure under administrative law and the GST statutory scheme.

Treatment of Competing Arguments: The Department did not initially contest the absence of reasons but later contended that the SCN on record was forged and incomplete, thus challenging the foundation of the Court's order.

Conclusions: The initial conclusion was that the retrospective cancellation was invalid due to procedural infirmities, warranting modification of the cancellation date.

(b) Allegation of Forgery of Show Cause Notice and Its Consequences

Relevant Legal Framework and Precedents: Forgery of official documents submitted before a Court is a serious offence, attracting penal consequences and vitiating any orders passed on the basis of such documents. The Court has inherent powers to recall orders obtained by fraud or misrepresentation.

Court's Interpretation and Reasoning: Upon the Department's review petition, the Court examined the SCN attached to the writ petition and found that it was incomplete and missing critical paragraphs, specifically the "Remarks" section that detailed the reasons for cancellation and the requirement for personal hearing with KYC documents.

The Court noted the presence of multiple writ petitions filed on similar grounds with identical counsel, raising a prima facie suspicion of systematic forgery to obtain favorable orders. The Court described this as a "serious matter" and expressed concern over the integrity of the documents.

Key Evidence and Findings: The Department produced the original, detailed SCN which included the missing "Remarks" paragraph. The affidavit supporting the writ petition was signed by the Petitioner, Mr. Sahib Alam, whose whereabouts became uncertain after filing the review petition.

Application of Law to Facts: The Court invoked its power under Section 114 read with Order 47 Rule 1 of the Code of Civil Procedure, 1908, to review and recall the earlier order on the ground of the forged document. It also issued non-bailable warrants for the production of the Petitioner to investigate the matter further.

Treatment of Competing Arguments: The Petitioner's counsel claimed to have issued notice to the client but stated that the client had not contacted him post-filing of the review petition. The Court directed the counsel to file an affidavit disclosing the source of the forged SCN annexed to the petition.

Conclusions: The Court concluded that the impugned order was vitiated by the forged SCN and accordingly recalled the order, issued warrants, and restored the writ petition to its original number for further proceedings.

(c) Review and Recall of the Impugned Order

Relevant Legal Framework and Precedents: Order 47 Rule 1 of the CPC allows review of a judgment on grounds such as discovery of new and important matter or evidence or on the ground of error apparent on the face of the record. The Court also has inherent jurisdiction to prevent miscarriage of justice.

Court's Interpretation and Reasoning: The Court found that the impugned order was passed on an incomplete and forged SCN, which constituted an error apparent on the face of the record and a fraud on the Court. This justified invoking review jurisdiction to recall the order.

Key Evidence and Findings: The forged SCN was the foundational document for the impugned order. The Department's production of the original SCN with detailed reasons was material new evidence.

Application of Law to Facts: The Court applied the review jurisdiction to correct the miscarriage of justice caused by reliance on forged documents.

Treatment of Competing Arguments: The Petitioner did not effectively counter the forgery allegation, and the counsel was directed to clarify the source of the forged document.

Conclusions: The order disposing of the writ petition was recalled, and the matter was restored for fresh consideration.

(d) Procedural Directions Regarding Production of Petitioner and Counsel's Affidavit

Relevant Legal Framework and Precedents: The Court has authority to issue non-bailable warrants to secure attendance of parties whose presence is necessary for adjudication. It may also require counsel to disclose material facts relating to documents filed before the Court.

Court's Interpretation and Reasoning: Given the seriousness of the forgery allegations and the absence of the Petitioner, the Court directed issuance of non-bailable warrants to ensure his production. The Court also required the Petitioner's counsel to file an affidavit identifying the source of the forged SCN.

Key Evidence and Findings: The affidavit filed by the Petitioner was signed by Mr. Sahib Alam, who had become uncontactable. The counsel's inability to produce the client raised concerns.

Application of Law to Facts: The Court exercised its powers to secure attendance and ensure transparency in the litigation process.

Treatment of Competing Arguments: The counsel's limited response was deemed insufficient, necessitating further disclosure.

Conclusions: Non-bailable warrants were issued, and the counsel was directed to file the requisite affidavit.

3. SIGNIFICANT HOLDINGS

"Absence of reasons in the original SCN in support of a proposed retrospective cancellation as well as a failure to place the petitioner on prior notice of such an intent clearly invalidates the impugned action."

This principle underscores the necessity of a reasoned show cause notice and adherence to natural justice before retrospective cancellation of GST registration.

"The Court prima facie, is of the opinion that this is a serious matter where the show cause notice has clearly been fudged with an intent to obtain a favourable order by this Court."

This statement establishes the Court's firm stance against forgery and manipulation of judicial processes, emphasizing the sanctity of documents filed before the Court.

The Court recalled the earlier order disposing of the writ petition and restored the matter to its original number, thereby nullifying the effect of the impugned order based on forged documents.

Non-bailable warrants were issued for the production of the Petitioner and the counsel was directed to disclose the provenance of the forged SCN, reflecting the Court's commitment to ensuring accountability and preventing abuse of process.