TMI Blog2024 (3) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... istered despite his desire to seek cancellation of registration. The expression shall issue an order used in Rule 22 (3) of the Rules cannot be construed as mandatory for proceedings under Rule 21 and directory for proceedings under Rule 20. Accordingly, we hold that the expression shall be passed within 30 days used in Rule 22(3) of the Rules is not mandatory but is only directory. The contention of learned counsel for the petitioner cannot be accepted that the authorities have lost the right to pass an order after the lapse of period of 30 days of the filing of the reply by the petitioner to the Show Cause Notice issued under Rule 21 of the Rules. The petition is accordingly disposed of directing the Proper Officer to expeditiously pass an order on the Show Cause Notice, preferably within a period of two weeks from today. - HON BLE MR. JUSTICE SANJEEV SACHDEVA AND HON'BLE MR. JUSTICE RAVINDER DUDEJA Advocates who appeared in this case: For the Petitioner Mr. Sameer Gupta, Advocates For the Respondents: Mr. Manoj Kumar Tyagi, SPC for R-1 Mr. Arun Khatri, Senior Standing Counsel for R-2 Mr. Harpreet Singh, SSC Mr. Rajeev Agarwal, ASC JUDGMENT SANJEEV SACHDEVA, J. (ORAL) 1. Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said show cause notice, alongwith proof of additional place of business stating that the impugned notice was issued based on ex-parte physical verification of the business place, which is contrary to Rule 25 of the Central Goods and Service Tax Rules, 2017 (hereinafter referred to as the Rules). 7. It is submitted by learned counsel for the Petitioner that till dated the Show Cause Notice that was issued on 22.06.2023 has not been adjudicated. He submits that as per Rule 22 (3) of the Rules, the Show Cause Notice is deemed to have lapsed and cannot be adjudicated upon. 8. Per contra, the stand of the Respondent in their counter affidavit is that a physical verification of the premises of the Petitioner was carried out, and the Field Visit Report which also provides the location details including longitude and latitude of the premises, and also the photographs, show that the registered address of the Petitioner was a residential premises on the third floor and no business activity was being carried out at the subject property. This it is stated was also confirmed by the landlord of the said premises. 9. To ascertain the merits of the submission of learned counsel for the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension. (3A) A registered person, whose registration has been suspended under sub-rule (2) or sub-rule (2A), shall not be granted any refund under section 54, during the period of suspension of his registration. (4) The suspension of registration under sub-rule (1) or sub-rule (2) or sub-rule (2A) shall be deemed to be revoked upon completion of the proceedings by the proper officer under rule 22 and such revocation shall be effective from the date on which the suspension had come into effect.] Provided that the suspension of registration under this rule may be revoked by the proper officer, anytime during the pendency of the proceedings for cancellation, if he deems fit. Provided further that where the registration has been suspended under sub-rule (2A) for contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29 and the registration has not already been cancelled by the proper officer under rule 22 the suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns. (5) Where any order having the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission of the application or the date from which cancellation is sought whichever is later. 12. Rule 21A (2) deals with a case where a Proper Officer has reasons to believe that the registration of the person is liable to be cancelled under Section 29 or under Rule 21, in which case the suspension is to take effect from the date determined by the said officer. 13. Rule 22 (3) stipulates that where a person who has submitted an application for cancellation of his registration or the registration is liable to be cancelled, the Proper Officer shall issue an order in Form GST REG-19 within a period of 30 days from the date of the application, submitted under Rule 20, or as the case may be, the date of reply to Show Cause Notice issued under sub-rule 1 or under sub-rule 2A of Rule 21A. 14. Since the impugned Show Cause Notice dated 22.06.2023 clearly states that the notice has been issued under Rule 22 (1) and sub-rule (2A) of rule 21A, the provisions of rule 22 (3) would clearly apply to the said Show Cause Notice. 15. The question, however, that arises for determination is whether the expression used shall issue an order within a period of 30 days is mandatory or directory. 16. For d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n used, the statute is only permissive or directory in the sense that non-compliance with those provisions will not render the proceeding invalid [State of U.P. v. Manbodhan Lal Srivastava, AIR 1957 SC 912] and that when a statute uses the word shall , prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute [ State of U.P. v. Babu Ram Upadhya, AIR 1961 SC 751]. The principle of literal construction of the statute alone in all circumstances without examining the context and scheme of the statute may not serve the purpose of the statute [ RBI v. Peerless General Finance Investment Co. Ltd., (1987) 1 SCC 424]. 29. To examine whether a provision is directory or mandatory, one of the tests is that the court is required to ascertain the real intention of the legislature by carefully attending to the whole scheme of the statute. Keeping in view the scheme of the statute, we find that Section 22(2) of the Act is only directory and thus, the decree-holder cannot be non-suited for the reason that such relief was not granted in the decree for specific relief. (underlining supplied) 19. Further, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the purpose, those prescribed formalities which are essential to the validity of such thing, would be mandatory. However, if by holding them to be mandatory, serious general inconvenience is caused to innocent persons or general public, without very much furthering the object of the Act, the same would be construed as directory. ***** ***** ***** 25. The law on this issue can be summarised to the effect that in order to declare a provision mandatory, the test to be applied is as to whether non-compliance with the provision could render the entire proceedings invalid or not. Whether the provision is mandatory or directory, depends upon the intent of the legislature and not upon the language for which the intent is clothed. The issue is to be examined having regard to the context, subject-matter and object of the statutory provisions in question. The Court may find out as to what would be the consequence which would flow from construing it in one way or the other and as to whether the statute provides for a contingency of the non-compliance with the provisions and as to whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order. ***** ***** ***** (9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund. ***** ***** ***** 23. Section 74 of the Act reads as under: 74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts. ( 1) Where it appears to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. One initiated by the taxpayer by submitting an application seeking cancellation of registration and the other by the proper officer by issuance of show cause notice for cancellation of the registration. The timeline provided for issuance of an order is 30 days for both the proceedings. If the intention was that the proper office would forfeit the right to pass an order, then an anomalous situation would arise with regard to proceedings where the taxpayer voluntarily applies for cancellation. If the proper officer, qua the said proceedings, also forfeits the right to issue an order, then the application seeking cancellation would be deemed to be rejected and the taxpayer would continue to remain registered despite his desire to seek cancellation of registration. 29. The expression shall issue an order used in Rule 22 (3) of the Rules cannot be construed as mandatory for proceedings under Rule 21 and directory for proceedings under Rule 20. Accordingly, we hold that the expression shall be passed within 30 days used in Rule 22(3) of the Rules is not mandatory but is only directory. 30. In view of the above, we are unable to accept the contention of learned counsel for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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