Lack of opportunity of hearing results in stay of Bank Attachment and Cancellation of Registration

In Cheema Local Carrier & Construction v.Assistant Commissioner SGST [WP(T) No. 51 of 2021 dated August 09, 2021], Cheema Local Carrier & Construction ('the Petitioner') has filed the current writ petition challenging three issues:

• Provisional attachment of bank account,
• Cancellation of registration certificate under Goods and Services Tax ('GST'); and
• Input Tax Credit ('ITC') being blocked.

The Petitioner contended that Rule 21 of the Central Goods and Services Tax Rules, 2017 ('CGST Rules'), mandates the ground of cancellation of registration must exist, however the Show Cause Notice ('SCN') issued did not mention the contraventions which the Petitioner must have made which resulted in cancellation of registration.

Also contended that under Rule 159(5) of the CGST Rules, when the objection is filed against attachment, the Commissioner after affording an opportunity of being heard may release the said property/ account. In the current case, no hearing was provided to the petitioner, which resulted into closure of the business.

The Hon’ble High Court of Chhattisgarh, relied on the case of Valerius Industries v. Union of India [Special Civil Application No. 13132 of 2019 dated July 31, 2019] which stated that there has to be some relevance to establish the sufficiency of ground and to state an opinion by the authority in this regard of attachment of a like nature.

It further noted, if the reply is not filed, the attachment order of the bank account and cancellation of registration does not show that what grounds were existing to pass such order.

Additionally, it directed the order dated February 17,2021 directing the attachment of Bank Account along with the order for cancellation of registration dated March 26, 2021 shall remain stayed, till the next date of hearing.