The Bombay High Court in a recent judgement has directed the re-adjudication of the matter when the assessee challenged the suspension of Goods and Service Tax (GST) registration based on Show Cause Notice (SCN) with a new cause of action.
Focus Ingredients Impex Pvt. Ltd, the petitioner challenged the order of suspension of GSTN registration of the Petitioner under provisions of the Goods and Services Tax Act. The Petitioner contended that the subject matter is covered by the earlier action of cancellation of registration.
On the other hand, the respondent contended that the subject matter of the show cause notice is based on a new cause of action, which is entirely different from the earlier cause of action.
The GST registration can be suspended only when there are valid reasons for the authorised authority to believe that the registration should be cancelled. Before suspending the GST, the officer may provide a warning or give the offender a chance to make things right.
Form GST REG-31 is used to notify the taxpayer of discrepancies. The form also states that if the taxpayer does not offer a reasonable justification, Goods and Services Tax Registration may be cancelled. If the officer determines that the justification is insufficient or inadequate, he can nonetheless suspend. The suspension of GST registration can be revoked after the completion of GST registration cancellation proceedings. The revocation will be effective from the date the suspension has come into effect.
Without going into the merits of the matter, the two-judge bench comprising Justice Amit Borkar and Justice Kamal Khata directed the Petitioner to appear before Respondent and to decide the show cause notice dated 26th April 2023 as expeditiously as possible and within four weeks.
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