2025 (6) TMI 113 - HC - GST

Cancellation of GST registration - Forged SCN showing that SCNs did not mention any reasons based on which the GST registrations of the Petitioners were cancelled - violation of principles of natural justice - HELD THAT - The entire facts that have been revealed in this case shows that the petitions filed by the Petitioners were filed by fictitious persons and it is not even clear as to whether the persons who have filed these petitions even exist as forged Aadhaar Cards have been used by the said persons. The same have been identified by the ld. Counsel for the Petitioner. The affidavits have been attested and relief has been obtained in these matters. The UIDAI data is usually protected by the laws of privacy. However considering the nature of the illegalities in this matter the details supplied by the UIDAI of all the four persons including their addresses and mobile numbers are handed over to the ld. Counsels appearing for the Department i.e. Mr. Panwar and Mr. Singla as also to Mr. Sanjay Lao ld. Standing Counsel (Criminal) GNCTD. List these matters on 29th May 2025 at 2 30 p.m.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the Show Cause Notices (SCNs) issued for cancellation of GST registrations were valid, particularly regarding the requirement to state reasons for cancellation.

- Whether the SCNs filed along with the petitions were genuine or forged.

- The authenticity of the affidavits filed by the petitioners, including the verification of the identity of the deponents through Aadhaar cards and physical presence before the Oath Commissioner.

- The legality and validity of the cancellation orders of GST registrations based on the SCNs and affidavits submitted.

- The extent of fraudulent practices involved in the filing of petitions, including the use of forged Aadhaar cards and fictitious identities.

- The procedural and investigatory steps to verify the identities of petitioners and the authenticity of documents submitted to the Court.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Show Cause Notices (SCNs) and requirement of reasons for cancellation of GST registrations

The legal framework under GST law requires that any cancellation of registration must be preceded by a Show Cause Notice specifying reasons for such cancellation. The predecessor bench had relied on the SCNs filed along with the writ petitions, which allegedly did not mention any reasons for cancellation. This led to the setting aside of cancellation orders based on the principle that SCNs without reasons are invalid, as supported by the precedent in the case of Riddhi Siddhi Enterprises vs. CGST.

However, the Department subsequently revealed that the SCNs filed with the petitions were forged and fraudulent, and that the actual SCNs did contain reasons under the "remarks" column. This revelation undermined the initial assumption of the genuineness of the SCNs and called into question the validity of the relief granted earlier.

The Court's reasoning emphasized the importance of genuine SCNs containing valid reasons for cancellation, as required by law, and the impropriety of relying on forged documents to grant relief. The Court directed further investigation into the authenticity of the SCNs and related documents.

Issue 2: Authenticity of affidavits and identity verification of petitioners

The affidavits filed by the petitioners were attested by an Oath Commissioner, Ms. Shilpa Verma. The Court noted discrepancies in the verification process, including the Oath Commissioner's inability to recall whether the petitioners had physically appeared before her and her lack of recognition of their photographs. The attestation process, as described, requires the deponent's physical presence and verification of original Aadhaar cards.

UIDAI was directed to verify the Aadhaar cards submitted by the petitioners. The UIDAI report and police investigation revealed that the Aadhaar cards were forged and did not match the actual individuals' photographs or identities. For example, the Aadhaar card for Mr. Aman was found to be fabricated, with the real individual being a domestic help whose photograph did not match the one submitted.

The Court observed that affidavits were attested based on forged Aadhaar cards and that the individuals purported to be petitioners might be fictitious. The counsel for the petitioners had identified these forged Aadhaar cards and admitted to receiving fees in cash from the petitioners, further indicating irregularities.

Issue 3: Investigation into fraudulent practices and procedural safeguards

The Court took note of the disturbing facts that emerged from the police investigation and UIDAI report. The bank account of one petitioner firm, M/s Compact Enterprises, showed large transactions, but the rent agreement and statements from the property owner and family members indicated that the petitioner rarely visited the premises and no legal case had been filed on their behalf.

The Court directed the police to produce the individuals named in the petitions in Court and ordered further inquiries based on addresses and mobile numbers obtained from UIDAI. The Court also retained the original registers of the Oath Commissioner for further scrutiny.

The Court balanced the privacy protections accorded to UIDAI data with the need to investigate serious illegalities, allowing the Department's counsel access to the relevant details for further inquiry.

3. SIGNIFICANT HOLDINGS

- "The entire facts that have been revealed in this case shows that the petitions filed by the Petitioners were filed by fictitious persons and it is not even clear as to whether the persons who have filed these petitions even exist as forged Aadhaar Cards have been used by the said persons."

- The Court established the principle that relief obtained based on forged documents and fictitious identities is impermissible and that the authenticity of documents and identities must be rigorously verified before granting any judicial relief.

- The Court underscored the importance of the requirement that SCNs must contain valid reasons for cancellation of GST registrations and that reliance on forged SCNs is legally untenable.

- The Court's order to involve UIDAI and police authorities for verification of identities and documents reflects a procedural safeguard to prevent abuse of judicial processes through fraudulent filings.

- The Court held that the attestation of affidavits by an Oath Commissioner requires physical presence and proper identification of deponents, and failure in this regard can lead to the invalidation of affidavits.

- The final determination was that the petitions filed on the basis of forged SCNs and affidavits were fraudulent, and appropriate investigations and proceedings must follow to address the illegalities involved.