In a significant ruling the Kerala High Court observed that the Superintendent of Central Tax should take an independent decision without the influence of direction by the Directorate General of GST Intelligence (DGGI) for cancellation of GST Registration.
The present Writ Petition was filed by the petitioner, Muhammad Salmanul Faris K, impugning order whereby the petitioner’s GST registration has been cancelled. Primarily on the ground that the petitioner has issued Invoices/Bills to other dealers without supplying goods or providing any services in violation of the GST Act and Rules and such violation of raising Invoices and Bills have made use by the purchasing dealers for availment of the declaration of the input tax credit or refund of tax.
It appeared that some intelligence inputs were received for fake invoicing. The DGGI, Kochi Zonal Unit, in view of the intelligence report, directed the Range Officer to cancel the petitioner’s GST Registration, under Section 29 (2) (a) read with Rule 21 (e) of the CGST Act/Rules, 2017.
The counsel for the petitioner submitted that when the DGGI Cochin Unit has already taken a decision and directed for cancellation of the GST registration of the petitioner, the competent authority could not have taken a decision contrary to the said direction issued by the higher authority. It is further submitted that the said direction for cancellation of the GST registration of the petitioner was without following the due process of the law prescribed under the statutes and rules there under.
The counsel for the respondents submitted that a large cartel is operating for availing fake input tax credit. There has been intelligence input and investigation in respect of the cartel and after conducting the investigation, it was confirmed that the cartel is operating for availing the fake input tax credit, and, therefore, DGGI, Kochi Zonal Unit directed to cancel the GST registration certificate of the petitioner. it was further submitted that the issuance of Show cause notice and opportunity of hearing to the petitioner was granted.
A Single Bench of Justice Dinesh Kumar Singh observed that “The adverse materials collected against the petitioner must be given to him for adverting the same by him. After taking the evidence from the petitioner and providing an opportunity of hearing to him, a fresh order may be passed in accordance with law within a period of three weeks from 18.09.2023.”
The Court stated that if the show cause is cancelled, the petitioner would be entitled for restoration of the GST registration certificate. However, if the authority takes a decision to cancel the GST registration of the petitioner, he may take recourse to appropriate proceedings as available under law.
The Court made it clear that the Superintendent of Central Tax should take an independent decision without being influenced by the direction of the DGGI, Kochi Zonal Unit.
Aswin Gopakumar, Caounsel appeared for the petitioner and P.T. Dinesh, Counseppeared l for the respondent.
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