2025 (7) TMI 204 - HC - GST

Violation of principles of natural justice - Petitioner had no opportunity to meet with the allegations - vague SCN - fraud willful misstatement or suppression of facts - cancellation of the Petitioner s Registration - HELD THAT - The Petitioner on instructions submitted that for a period of three months from today the accumulated ITC will not be utilized. The impugned orders are set aside but the Respondents are granted liberty to issue a fresh show cause notice as proposed within four weeks from today. The learned counsel for the Petitioner states that a response will be filed within four weeks of receiving the show cause notice. The show cause notice must be disposed of within four weeks of the Petitioner filing his reply to the same. Petition disposed off.

Summary

The Bombay High Court, per M. S. Sonak, J., quashed and set aside the impugned Order-in-Original dated 7 February 2022 and Order-in-Appeal dated 28 March 2024, which cancelled the Petitioner's registration. The Court held that the show cause notice dated 15 January 2022 was "extremely vague" and failed to disclose the material basis for alleging fraud, willful misstatement, or suppression of facts, merely replicating statutory language without furnishing the Deputy Commissioner A.E's letter relied upon in the cancellation order. This omission denied the Petitioner a fair opportunity to meet the allegations, constituting a "gross breach of natural justice." The appellate authority's failure to consider these crucial contentions rendered the appeal order "vulnerable."The Court granted liberty to the Respondents to issue a fresh show cause notice within four weeks, accompanied by relevant material, and directed disposal within four weeks of the Petitioner's response. A personal hearing must be granted, and the final order must be reasoned and communicated. The Petitioner undertook not to utilize the accumulated Input Tax Credit (ITC) for three months, which the Court accepted as an undertaking binding on the Petitioner. Both parties were directed to adhere strictly to the prescribed timelines, with the Petitioner refraining from seeking undue adjournments and the Respondents avoiding unnecessary delays. The Rule was made absolute without costs.