A single bench of the Kerala High Court has recently quashed the proceedings against the petitioner, M/s Pankaj Cottage for issuance of REG-31 instead of GST Registration Cancellation notice in Form GST REG-17.
The petitioner approached the Kerala High Court, aggrieved by the order cancelling the registration granted to the petitioner under the Central Goods and Services Tax Act/ the State Goods and Services Tax Act, in the exercise of jurisdiction under Section 29 of those enactments.
Though the impugned order appears to have been preceded by a show cause notice issued electronically, the petitioner contended that the show cause notice never came to his attention.
Mr. N.N. Suganapalan, learned Senior Counsel appearing for the petitioner, on the instructions of Adv. S. Sujin, contended that the entire procedure adopted by the respondents in cancelling the registration of the petitioner was absolutely illegal and unsustainable.
It was submitted that the show cause notice should have been issued in Form GST REG-17. It is also submitted that the show cause notice is issued in Form GST REG-31, which is the form applicable to proceedings leading to the suspension of the registration for reasons specified.
The Counsel appearing for the petitioner referred to the judgement of a Division Bench of the Gujarat High Court in Aggarwal Dyeing and Printing v. State of Gujarat and submitted that, where the show cause notice is vague and where the order of cancellation also does not specify the factors which lead to the cancellation of registration, the entire proceedings must be quashed.
He also informed the court that, “He submits that the delay in filing returns and payment of tax for the period of default was not wilful and was on account of severe financial stress.”
Senior Government Pleader Thushara James, appearing for the respondents-revenue, referred to the provisions of the CGST/SGST Acts and the provisions of Rule 22(1)&21A of the CGST/SGST Rules as well as the relevant forms namely, Form GST REG-17 and Form GST REG-31 to contend that the scheme of cancellation of registration is inbuilt into the provisions of Sections 29 and 30.
It was also submitted that the notices issued are ones generated by the system and convey with sufficient clarity the reason for taking steps for cancellation.
SGP Alfred appeared for the second respondent.
Observing that, “Apart from the fact that Ext.P.5 (show cause notice) is issued in the wrong form, it is also bad for the complete absence of any detail.” and concurring with the judgement in Aggarwal Dyeing and Printing v. State of Gujarat, the Single Bench of Justice Gopinath P set aside the GST proceedings in favour of the petitioner.
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