GST Registration of Composition Scheme Taxpayer Cancelled Similar to Grounds of Regular Taxpayer: Allahabad HC finds Order Non-speaking and Incorrect [Read Order]

The Allahabad High Court recently quashed and set aside a Goods and Services Tax ( GST ) registration cancellation order issued to a taxpayer registered under the Composition Scheme similar to the grounds applicable to Regular tax payer, finding the order non-speaking and issued under incorrect provisions of the GST Act, 2017.

Sky Associates, the petitioner, contended that the cancellation notice, dated February 6, 2024, was issued without their knowledge as it was uploaded on the common portal, which the petitioner failed to check.

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The petitioner only became aware of the cancellation when informed by the Railways during business dealings. Attempts to revoke the cancellation were denied, prompting the petitioner to approach the court.

The petitioner argued that, as a Composition Scheme taxpayer, they are required to file quarterly returns (GSTR-4) and an annual return (GSTR-9A). However, the show-cause notice erroneously cited non-filing of monthly returns applicable to regular taxpayers.

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Furthermore, the cancellation order treated the petitioner as a taxpayer not registered under Section 10 of the Act, 2017, which governs the Composition Scheme. This error, the petitioner claimed, reflected non-application of mind and warranted the order's quashing.

It is submitted that the case of the petitioner, would be governed by provisions of Section 29(2)(b) of the Act, 2017, which pertains to a person paying tax under Section 10 of the Act, 2017. However, the proceedings were under Section 29(2)(c) which is not correct.

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Justices Vikas Budhwar  and Arun Bhansali noted that the respondents did not deny the non-speaking nature of the order and acknowledged the petitioner’s claim of being registered under Section 10 of the Act.

Accordingly, the high court set aside the cancellation order and remanded the matter to the jurisdictional authority. It was observed that “In the circumstances of the case wherein, the claim made by the petitioner is that it is covered under Section 10 of the Act, 2017 and as such, issuance of notice itself is incorrect, and the order impugned dated 15.3.2024 ordering for cancellation of registration is non speaking, the same is quashed and set aside.”

The bench directed the petitioner to appear before the authority on December 24, 2024, and file a response to the show-cause notice, raising all relevant pleas, including their status as a Composition Scheme taxpayer.

To Read the full text of the Order CLICK HERE

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