GST Registration Cancellation, Only allowing 4 days to Submit Documents: Karnataka HC directs to Reconsider SCN [Read Order]

The High Court of Karnataka directed to reconsider the show cause notice (SCN) since only 4 days were allowed to submit documents to prevent the cancellation of GST registration.

Ummer Farooq, the petitioner challenged the impugned order dated 08.12.2022 issued under Section 29[2][a] of the Central Goods and Services Tax Act, 2017 [CGST Act] cancelling the petitioner's GST registration on the ground of violation of the principles of natural justice.

Sri. Shreehari Kutsa, the counsel for the petitioner, and Sri. Jeevan J Neeralgi, the counsel for the respondents are heard by the court.

The first respondent has issued notice dated 26.10.2022 informing the petitioner that the petitioner has availed input tax credit for different transactions with entities as mentioned in such notice but the registration of such entities has been either cancelled or suspended and hence, the petitioner must furnish documents in support of the input tax credit. The respondent has been afforded five days to file such documents.

On receipt of such Show Cause Notice, the petitioner has appeared before the first respondent and sought time. The first respondent on 08.12.2022 issued the impugned order cancelling the petitioner's GST registration on the ground that the petitioner 'has not reversed the disputed input tax credit with interest and penalty'.

The petitioner has applied with the first respondent for revocation of the cancellation which is pending. It was contended that all of his transactions with the suppliers for the value of more than Rs.10,000/- is made only through banking transactions. If there is any default by a supplier who has furnished GST numbers, the petitioner cannot be made liable and that would be contrary to the provisions of Section 16 of the GST Act, 2017 which contemplates only four conditions to claim the input tax credit.

It was argued by the counsel of the petitioner that only four days were allowed to produce the documents and therefore, with the service of Show Cause Notice dated 01.11.2022, the petitioner appeared before the first respondent on 09.11.2022 and sought for time.

The first respondent issued the impugned order before the petitioner could furnish his bank documents and other records to demonstrate that all his transactions are supported by proper invoices, e-way bills and bank records.

A Coram comprising Justice B M Shyam Prasad viewed that the petition must be preferred in part quashing the impugned order of cancellation of GST registration restoring the proceedings for reconsideration by the first respondent.

The court allowed the petition in part quashing the impugned order of cancellation of GST registration dated 08.12.2022 restoring the proceedings for reconsideration by the first respondent.

To Read the full text of the Order CLICK HERE

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