Quashed cancellation of GST registration order as no opportunity of being heard was given

The Allahabad High Court has overturned the cancellation of a GST registration for S.S. Traders. The court found that the authorities failed to provide the petitioner with a proper opportunity to be heard before cancelling their registration, which is a mandatory requirement under the CGST Act. Consequently, both the initial cancellation order and the subsequent appeal decision were quashed, allowing the petition.

The Hon'ble Allahabad High Court ("Allahabad HC") in the matter of M/S. S.S. Traders v. State of U P and 3 Others [WRIT TAX No. - 651 of 2021 dated November 02, 2021], quashed the cancellation of GST registration order as no opportunity of hearing was accorded. Further, said that the denial of opportunity of hearing to the assessee as is mandated in the first proviso to Section 29(2) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") vitiates the proceedings as well as the orders cancelling the registration.

M/S. S.S. Traders ("the Petitioner") filed the current petition being aggrieved of the order dated July 17, 2021 passed by Additional Commissioner, Grade-2 (Appeal), Commercial Tax, Muzaffarnagar ("the Respondent") in which the order dated May 28, 2021 for cancellation of GST registration of the Petitioner was upheld.

Factually, the Petitioner was engaged in the business of purchase and sale of Iron and Steel Goods and it was registered under the provisions of the CGST Act. By means of show-cause notice the Petitioner was directed to show cause why its registration should not be cancelled. The Petitioner submitted its reply but by means of order the registration of the Petitioner was cancelled for the reason that no one was found at the place of the business and neither any business activity nor any bill book were found at the time of the survey and the landlord of the premises had informed the survey team that no one came there to start a business and no business activity takes place there.

The cancellation of GST registration order further observed that after scrutinizing the return it was found that the Petitioner had purchased goods worth Rs. 29,50,000/- from non-existing dealers and availed bogus input tax credit with mala fide intention. It was also found that after granting registration the Petitioner did not furnish bank account details in due time in terms of Rule 10A of Central Goods and Services Tax Act Rules, 2017 ("the CGST Rules").

Whereas the Petitioner contended that the show cause notice reveals no details as to whether any survey had actually taken place or not and that what was the date and time fixed for a personal hearing. It is contended that the show cause notice, which is imperative compliance of the principles of natural justice was mandatorily required to furnish basic details regarding the date and time of the personal hearing.

The Hon'ble Allahabad High Court held that the denial of opportunity of hearing to the Petitioner as is mandated in the first proviso to Section 29(2) of the CGST Act vitiates the proceedings as well as the orders cancelling the registration of the Petitioner. Resultantly, the order of cancellation of registration dated May 28, 2021 as well as order passed in the appeal dated July 17, 2021 are quashed. And the petition is allowed.

>in the matter of M/S. S.S. Traders v. State of U P and 3 Others [WRIT TAX No. - 651 of 2021 dated November 02, 2021], quashed the cancellation of GST registration order as no opportunity of hearing was accorded. Further, said that the denial of opportunity of hearing to the assessee as is mandated in the first proviso to Section 29(2) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") vitiates the proceedings as well as the orders cancelling the registration.

M/S. S.S. Traders ("the Petitioner") filed the current petition being aggrieved of the order dated July 17, 2021 passed by Additional Commissioner, Grade-2 (Appeal), Commercial Tax, Muzaffarnagar ("the Respondent") in which the order dated May 28, 2021 for cancellation of GST registration of the Petitioner was upheld.

Factually, the Petitioner was engaged in the business of purchase and sale of Iron and Steel Goods and it was registered under the provisions of the CGST Act. By means of show-cause notice the Petitioner was directed to show cause why its registration should not be cancelled. The Petitioner submitted its reply but by means of order the registration of the Petitioner was cancelled for the reason that no one was found at the place of the business and neither any business activity nor any bill book were found at the time of the survey and the landlord of the premises had informed the survey team that no one came there to start a business and no business activity takes place there.

The cancellation of GST registration order further observed that after scrutinizing the return it was found that the Petitioner had purchased goods worth Rs. 29,50,000/- from non-existing dealers and availed bogus input tax credit with mala fide intention. It was also found that after granting registration the Petitioner did not furnish bank account details in due time in terms of Rule 10A of Central Goods and Services Tax Act Rules, 2017 ("the CGST Rules").

Whereas the Petitioner contended that the show cause notice reveals no details as to whether any survey had actually taken place or not and that what was the date and time fixed for a personal hearing. It is contended that the show cause notice, which is imperative compliance of the principles of natural justice was mandatorily required to furnish basic details regarding the date and time of the personal hearing.

The Hon'ble Allahabad High Court held that the denial of opportunity of hearing to the Petitioner as is mandated in the first proviso to Section 29(2) of the CGST Act vitiates the proceedings as well as the orders cancelling the registration of the Petitioner. Resultantly, the order of cancellation of registration dated May 28, 2021 as well as order passed in the appeal dated July 17, 2021 are quashed. And the petition is allowed.