Allahabad High Court quashes Order canceling GST Registration as No prior SCN was issued [Read Order]

The Allahabad High Court quashed the Order cancelling GST Registration as no prior show cause notice was issued.

The petitioner, M/S S.R. Steel was granted registration under the UPGST Act, 2017. Initially, a show-cause notice proposing to cancel the petitioner’s registration was uploaded on the GST Portal. The notice was wholly unintelligible, inasmuch as the substance of the notice/reasons appeared in garbage language/symbols. This fact is admitted to the State. According to the learned Standing Counsel, realizing the mistake, the respondent authorities issued a physical notice to the petitioner on the same date.

The respondents contended that despite the order cancelling the petitioner’s registration, the GST Portal continued to disclose the status of the petitioner firm as “active”. Occasioned by that the Assistant Commissioner, Commercial Tax wrote to the Joint Commissioner (IT), Commercial Tax seeking reconciliation of the aforesaid discrepancy. Consequent to that communication the impugned order regarding cancellation of petitioner’s registration has been served on the petitioner.

Further, the respondents have also contended that due notice had been issued to the petitioner and thereafter the order dated 30.6.2018 was passed to cancel the petitioner’s registration. Only technical issues have been resolved by means of the impugned order dated 15.7.2020 and that order does not adjudicate the rights of the parties. In fact, it has no independent existence. the petitioner has the adequate remedy of appeal against the order dated 30.6.2021 and also to seek recall of that order.

The division bench of Justice Naheed Ara Moonis and Justice Saumitra Dayal Singh noted that the show cause notice dated 5.4.2018 as served on the petitioner was an unintelligible and a physical copy of the said notice was not served at the relevant time, the order cancelling the petitioner’s registration is found to be wholly ex-parte being contrary to the mandatory requirement of the first proviso to Section 29(2) of the Act. As to the delay, the petitioner has explained the same on account of the spread of the pandemic COVID-19.

“We lift the bar of alternative remedy as we find that the petitioner’s registration was cancelled without the issuance of any prior show-cause notice. Also, the delay is largely on account of the conduct of the State respondents or conduct attributable to the State respondents as they alone were responsible to update the information on the GST Portal. That not done, the petitioner/citizen may not be relegated to the forum of alternative remedy as his valuable right to do business has been curtailed in violation of the principle of natural justice,” the court said.

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