A division bench of the Gujarat High Court has quashed an order cancelling GST registration on the ground that the show-cause not does not contain the reasons for such an action.
A search proceeding was carried out by the Central GST Department at the premises of the petitioners, M/s Dee Cubes Diamonds Pvt Ltd. The department alleged the wrongful availment of Input Tax Credit (ITC) under the GST Act and issued notice for the cancellation of GST registration.
The counsel of the petitioner, Shri Uchit N. Sheth contended that the order canceling registration certificate dated 11.10.2022, is beyond the scope of show-cause notice, arbitrary and in breach of principles of natural justice. He further submitted that the show-cause notice being non-speaking and being bereft of any reasons is illegal.
Justice Sonia Gokani and Mrs. Justice Mauna M. Bhatt observed that no valid reason was given for cancellation of registration.
Quashing the impugned order and directing re-adjudication, the High Court held that “Despite requested, no details were provided and prima facie reply of the petitioners have not been considered. To our opinion, the show-cause notice dated 26.05.2022 does not specify the reason for which the allegation of wrongful availment or utilization of Input Tax Credit (ITC) or refund of tax is made. As the show-cause notice does not contain reason to justify the action of the respondent, it is violative of principles of natural justice. As held by this Court in Aggarwal Dyeing (Supra), reasons are heart and soul of the order and non-communication of the same itself amounts to denial of reasonable opportunity of hearing resulting into miscarriage of justice. Therefore, applying the same principle, as the show-cause notice dated 26.05.2022 is bereft of any reasons, the same deserves to be quashed and set aside and hereby quashed and set aside.”
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