2025 (7) TMI 1762 - HC - GST

Cancellation of registration under the provisions of WBGST /CGST Act 2017 - wilful suppression of facs - existence of business entity in the notified address or not - HELD THAT - This Court considering the case made out by the petitioners had directed the State respondents to make further enquiry as regards the place of business of the petitioner no. 1 and to file a report before this Court by taking note of the agreement dated 30th August 2022 executed between the petitioner no. 1 and the landlady Mrs. Manorama Dutta. Pursuant to the aforesaid the respondents had conducted a physical verification of the business premises of the petitioner no. 1 in accordance with rule 25 of the WBGST /CGST Rules 2017 - Since it is not necessary to hold back the petitioners further having regard to the disclosure made in the report it is proceeded to consider the said report and the writ petition. From a perusal of the aforesaid report it would transpire that the business entity of the petitioner no. 1 is found existing at the particular notified address. In this context it is found that the initial show cause has been issued on 6th January 2023 on the ground that the registration of the petitioner no. 1 had been obtained by reasons of fraud willful misstatement and suppression of fact. From the aforesaid report disclosed in Court today which is dated 25th February 2025 it would transpire that since according to the respondents in course of the earlier visit on 4th January 2023 the business activity of the petitioners at the business premises notified in the registration form could not be verified the above proceeding was initiated which culminated in the cancellation of registration. Since from the report as disclosed in Court today it is apparent that the business premises of the petitioner no.1 is found to be in existence the cancellation of registration cannot be permitted to continue. In view thereof the order of cancellation of the petitioner no.1 s registration effected vide order dated 17th February 2023 and the consequential orders passed thereon are all set aside. Petition disposed off.

Summary

ISSUES:

Whether the cancellation of registration under the WBGST/CGST Act, 2017 can be sustained on the ground of alleged fraud, willful misstatement, and suppression of fact when the business premises is found to exist upon verification.Whether the jurisdictional officer has the authority to restore registration after cancellation when the business entity is physically verified at the notified address.What is the procedural requirement regarding physical verification under rule 25 of the WBGST/CGST Rules, 2017, in relation to cancellation and restoration of registration.

RULINGS / HOLDINGS:

The cancellation of registration cannot be permitted to continue where the business premises of the registered entity is found to be in existence, thereby negating the grounds of fraud, willful misstatement, and suppression of fact initially alleged.The jurisdictional officer is directed to restore the registration on the portal based on the physical verification report confirming the existence of the business entity at the notified address.The physical verification conducted pursuant to rule 25 of the WBGST/CGST Rules, 2017, is a valid procedural step that must be completed before cancellation, and subsequent restoration is warranted upon satisfactory verification.

RATIONALE:

The Court applied the statutory framework under the WBGST/CGST Act, 2017, and the procedural requirements under rule 25 of the WBGST/CGST Rules, 2017, which mandates physical verification of business premises prior to cancellation of registration.The Court relied on the verification report dated 25th February 2025, which disclosed the existence of the business premises, thereby undermining the initial show cause notice alleging fraud and suppression of fact.The Court emphasized the necessity of proper procedural compliance and found the respondents' casual approach in filing the verification report regrettable but proceeded on the basis of the disclosed facts.The restoration of registration was conditioned on the undertaking by the registered entity to file returns and pay all applicable tax, interest, fine, and penalty within four weeks, reflecting a balanced approach between procedural fairness and regulatory compliance.