TMI Blog2021 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. This threshold has not been made in the present case. In other words, the Department has failed to show that the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence. The impugned order of the LPO rejecting the Petitioner s application for revocation of its cancellation of registration and the impugned appellate order dated 5th April, 2021 rejecting the Petitioner s appeal are hereby set aside. The Department is now directed to restore the Petitioner s registration forthwith by issuing appropriate orders/directions not later than one w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the registration. However, on the very same day, the Opposite Party No.2 issued another SCN for cancellation of registration, this time on the ground that: you have claimed ITC (Input Tax Credit) of ₹ 2,04,650,06 against fake invoices issued by nonexistent supplier . 4. A detailed reply was sent by the Petitioner to the aforesaid SCN on 31st August, 2020. It was pointed out that the Petitioner had purchased G.P. Sheets from M/s. Pawansut Enterprises. The details of the bill numbers, the dates, the value of the goods and the CGST SGST amounts paid and the total amount were set out in a tabular form. The three invoices were dated 11th April, 2018, 30th April, 2018 and 13th August, 2018. It was further pointed out that the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication submitted not satisfactory, hence cancelled. 7. On 10th December, 2020 the Petitioner applied under Section 30 of the OGST Act for revocation of the cancellation of registration. On 18th December, 2020, Opposite Party No.2 issued SCN in Form GST REG-23 for rejection of the said application. After the Petitioner filed a reply thereto on 24th December, 2020, Opposite Party No.2 on 7th January, 2020 rejected the revocation application. 8. On 8th January, 2021 Opposite Party No.2 issued a SCN under 74 (1) of the OGST Act read with Rule 142(1) of the OGST Rules fixing the date of filing the reply to the SCN dated 17th October, 2020 till 8th February, 2021. 9. The Petitioner at that stage filed W.P.(C) No.2708 of 2021 in this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sut Enterprises, that has attracted the SCN issued to the Petitioner by Opposite Party No.2 on the ground that ITC had been claimed against a fake invoice. 13. It is submitted by Mr. Harichandan that on a collective reading of Section 16 of the OGST Act with Rule 21 of the OGST Rules 2017, there is no provision that enables the cancellation of the registration of the purchasing dealer for any fraud committed by the selling dealer. Secondly, he points out that the cancellation registration of the selling dealer M/s. Pawansut Enterprises took place only on 1st October, 2019 i.e., long after the dates of the purchases made by the present Petitioner from the said dealer. He, therefore, submits that on the date of purchases took place, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces outlined above, in Clauses (a), (b) (c) are attracted in the present case. Consequently, Rule 21 of the OGST Rules cannot be invoked by the Department, in circumstances such as the present, to cancel the registration of the purchasing dealer. 17. The decision of the Gujrat High Court dated 10th December, 2020 in Special Leave Application No.15508 of 2020 (Vimal Yashwantgiri Goswami v. State of Gujarat) supports the case of the Petitioner. There, in nearly identical circumstances, the High Court came to the conclusion that the cancellation of registration was without any reason and the explanation offered by the registered dealer in response to the SCN issued for cancellation of registration was not even discussed. Here too a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence. 20. For the aforementioned reasons, the impugned order of the LPO rejecting the Petitioner s application for revocation of its cancellation of registration and the impugned appellate order dated 5th April, 2021 rejecting the Petitioner s appeal are hereby set aside. The Department is now directed to restore the Petitioner s registration forthwith by issuing appropriate orders/directions not later than one week from today. The Petitioner will correspondingly now be permitted to file all the return which it could not file on account of the cancellation of the registration. 21. The petition is allowed in above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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