GST Officer Suspended for Not Acting Against Fake Firm: Allahabad HC sets aside Suspension Order noting Officer not On duty [Read Order]
The continuation of the suspension order would not be required, particularly when the relevant events occurred during periods when the petitioner was either on duly sanctioned leave or posted elsewhere. Thus, set aside the order.
The Allahabad High Court has set aside the suspension of a State Tax Deputy Commissioner who was suspended for allegedly failing to act against a fake GST ( Goods and Services Tax ) -registered firm.
The court held that the continuation of her suspension was unjustified when the alleged misconduct occurred during a period when she was on approved leave and subsequently transferred out of the concerned jurisdiction.
The petitioner, Smt. Shriddha Kumari, joined State Tax services in 2008 and rose to the rank of Deputy Commissioner, State Tax, Sector-12, Prayagraj. She was suspended on 23 September 2025 on the allegation that she failed to initiate cancellation of GST registration of M/s Kanhaiya Enterprises, a firm later found to be bogus and illegally allowed input tax credit (ITC) set-off, leading to an alleged loss of ₹1.78 crore to the State exchequer.
According to the suspension order, the firm had applied for registration on 31 March 2023, was granted deemed registration on 1 May 2023, and was declared fake following departmental verification on 29 May 2023.
Challenging the suspension, the petitioner argued that she could not have taken any action because she was on child care leave from 1 June 2023 to 25 June 2023 and on medical leave from 26 June 2023 to 22 August 2023, after which she was transferred to Gorakhpur on the same date.
She contended that cancellation of GST registration is not an automatic process and requires issuance of notice and due inquiry, which she was in no position to initiate while on sanctioned leave. She further submitted that the fraudulent ITC set-off claimed by the firm pertained to December 2023 through March 2024, a period during which she was no longer posted in Prayagraj.
The Court noted that the State’s own instructions confirmed the petitioner’s leave period and her transfer to Gorakhpur much before the months in which the alleged fraudulent ITC was availed.
The Standing Counsel for the State could not dispute these facts and conceded that although disciplinary inquiry may proceed, the suspension order could be set aside.
The Court also observed that the petitioner’s absence was neither unauthorised nor abrupt, and thus resulting in inaction to her was prima facie unjustified.
Justice Vikas Budhwar held that in the facts of the case, the continuation of the suspension order would not be required, particularly when the relevant events occurred during periods when the petitioner was either on duly sanctioned leave or posted elsewhere.
The court, noting suspension without sufficient foundation causes undue hardship and serves no administrative purpose, quashed the suspension order.
At the same time, the Court clarified that setting aside the suspension would not prevent the disciplinary authority from proceeding with the inquiry. It directed that the inquiry be concluded within three months from the date the certified copy of the order is produced, and mandated cooperation from both parties.
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