GST Update No 336 on revocation application rejected without considering the facts is unsustainable.

The revenue authorities fail to take into consideration the replies of taxpayers and hence take actions against them on the basis of arbitrary grounds. Resultantly, the Courts have stepped forward in various cases and bash the tax authorities on taking such adverse actions against the assessee without affording them an opportunity of hearing. On similar parameters, one case was reported before Calcutta High Court in the case of Swarupa Ghosh V/s Assistant Commissioner of State Tax. The decision imparted in this case is subject matter of our present update.

The petitioner filed the Writ petition challenging the rejection of revocation application which were dismissed on the grounds of availability of alternate remedy. In the present case, show cause notice was issued as on 23.08.2021 to cancel the registration on the grounds that there was contravention of Section 29 of CGST Act, 2017. The reply of the same was submitted and order for cancellation was passed on 01.09.2021 which was devoid of reasons. An application of revocation was filed on 03.11.2021 and the registration was restored. The petitioner proposed to shift his place of business and hence, an application for cancellation of registration was submitted on 03.11.2021. However, the authority rejected the application by an order dated 25.11.2021 since balance sheet and profit and loss were not submitted as per the notice. On same date, another notice for cancellation of registration was issued alleging that the appellant obtained registration by means of fraud. The reply of the same was submitted on 02.12.2021 requesting to provide necessary documents to submit proper reply. Written submissions were submitted and hearing was fixed on 07.12.2021 on which the authority failed to provide any document and registration cancellation proceedings were dropped. Thereafter, second time registration cancellation application was filed. Once again, a show cause notice was issued to appellant to provide various details. The registration was cancelled as on 20.12.2021.

The appellant submitted that the cancellation order was passed in the midnight. Thereafter, another show cause notice was received on 21.12.2021 in the midnight for cancellation of GST registration which narrated that adverse report was attached. However, upon checking, no reports were attached along with the notice and were subsequently received on 28.12.2021. An e-mail was sent by petitioner at 2:47 p.m. seeking time to submit reply. The registration was cancelled without offering an opportunity of hearing as on 28.12.2021. A revocation application was filed on 17.01.2022 and a show cause notice was issued in this respect on 16.02.2022 for which detailed reply was submitted on 19.02.2022. However, the application was rejected by order dated 21.03.2022. The Single Bench dismissed the petition on the grounds of availability of alternate remedy.

The Court upon perusal of material placed before them observed that the order passed by adjudicating authority is devoid of reasons and none of the grounds raised by the petitioner were adhered to. It was narrated that it is not clear as to why department is dragging the matter unnecessarily. Even if there is any adverse material, the same should have been communicated along with the show cause notice along with providing an opportunity of hearing and passing a speaking order. The Commissioner should take a note of the way the cases are dealt with by the subordinate authorities special regarding cancellation of registration. Further, an orientation programme should also be conducted to sensitize the manner in which cases like these should be dealt with. Since the enactment in which they are functioning is totally new the officer should be trained properly and a copy of order should be placed before Commissioner as well. Since in the present case there is violation of principles of natural justice and non-speaking order is passed by the authorities, the impugned order is set aside and the matter is remanded back to the lower authorities. It had directed them to issue a proper show cause notice mentioning the allegations against the appellant and granting a period of 15 days to submit the reply.

The above decision is another example demonstrating the lack of proper training on the part of revenue officers as regards to issuance of appropriate show cause notice failing which results into quashing of entire adjudication proceedings. It is high time that the tax authorities should act judiciously and thereafter issue proper show cause notices otherwise the tussle between the department and taxpayers will continue in times to come.

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GST Update No 336 on revocation application rejected without considering the facts is unsustainable.

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