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TMI Blog2021 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal questioning the order passed by the learned Proper Officer (LPO) rejecting the Petitioner's application for revocation of cancellation of his registration on 7th January, 2021 under Section 30(2) of the OGST Act. 2. The background facts are that the Petitioner is carrying on the business of manufacturing and trade of Poly Vinyl Chloride (PVC) pipes, high-density polyethylene and low-density polyethylene pipes, scrap iron angles, iron scraps etc. On 14th August, 2020, the CT & GST Officer, Bhubaneswar (Opposite Party No.2) issued a show cause notice (SCN) in Form GST REG-17 under Rule 22(1) of the OGST Rules, 2017 for cancellation of Petitioner's registration on the ground that "in case, Registration has been obtained by means of frau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2017) 64 GST 623 (Delhi), wherein it was observed that the buyer cannot be put in jeopardy when he has done all that the law requires him to do and further that the purchasing dealer has no means to ascertain and secure compliance of the selling dealer. 5. On 17th October, 2020 an intimation was issued in Form GST DRC-01A Part-A under Section 74(5) of the OGST Act read with Rule 142(1A) of the OGST Rules by Opposite Party No.2 calling upon the Petitioner to pay the tax, interest and penalty amount aggregating to Rs. 3,48,066/- on the ground that the 'ITC claimed was against fake invoices issued by nonexistent supplier'. A reply was sent on 2nd November, 2020 by the Petitioner to Opposite Party No.2 asking for being provided with the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril, 2021 of the Appellate Authority is only that "the preventive measure has been taken by the LPO by cancellation of the registration of the appellate to prevent future fraud or to prevent from recurrence for such the regular claims of the ITC and that is the interest of the Government revenue". As noted earlier, the cancellation of the Petitioner's registration was for a very terse reason: "clarification submitted not satisfactory". As a result, the Court is not in a position to appreciate the actual reasons that prevailed with either the Appellate Authority or the LPO for cancellation of the Petitioner's GST registration. 12. At the outset, it is noted that Mr. Harichandan confines his submission to the restoration of the Petitioner's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into by the present Petitioner with the selling dealer in April and August 2018 were fake transactions. 15. The Court finds merit in the contention of Mr. Harichandan that for the fraud committed by the selling dealer, which resulted in cancellation of a selling dealer's registration, there cannot be an automatic cancellation of the registration of the purchasing dealer. Rule 21 of the OGST Rules reads as under: "21. Registration to be cancelled in certain cases. The registration granted to a person is liable to be cancelled, if the said person,- (a) does not conduct any business from the declared place of business: or (b) issues invoice or bill without supply of goods or services in violation of the provisions of the Act, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Pawansut Enterprises i.e. April and August, 2018, the GST registration of M/s. Pawansut Enterprises had not been cancelled. That was to take place much later on 1st October, 2019. Therefore, on the date the purchases took place there was no means for the Petitioner to know that entity which had a valid GST number, was in fact non-existent. 19. To attribute fraud in such circumstances to the Petitioner, as a purchasing dealer, the Department would have to satisfy a high threshold of showing that the purchaser indulged in the transactions with the full knowledge that the selling dealer was non-existent. The Department would have to show that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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