Merely Quoting Section and Alleging Fraud, Wilful Misstatement or Suppression of Facts in SCN not Enough to Cancel GST Registration: Bombay HC [Read Order]
The revenue stated that an attachment containing the specifics had been suppressed by the petitioner, but the petitioner produced screenshots from the online portal to prove otherwise.
SCN - GST - Taxscan
SCN - GST - Taxscan
In a recent decision, the Bombay High Court set aside the cancellation of a Goods and Services Tax (GST) registration on the ground that merely quoting a section and alleging fraud, wilful misstatement or suppression of facts in a show cause notice (SCN) is not sufficient for such drastic action.
The petitioner Saurabh Sahu, challenged the cancellation of his GST registration under the Maharashtra Goods and Services Tax Act, 2017 by an order dated 7 July 2023, following a show cause notice that was issued on 12 June 2023.
The show-cause notice merely stated that the petitioner’s GST registration was obtained by means of fraud, wilful misstatement, or suppression of facts as encompassed under Section 29(2)(e) of the Maharashtra GST Act, 2017.
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The petitioner, represented by Nirmal Pagaria contended before the Bombay High Court that the show cause notice was completely vague and bereft of any details regarding the basis of the allegations, thereby depriving him of the opportunity to defend himself effectively.
Furthermore, although the show-cause notice required the petitioner to furnish a reply or appear for personal hearing on the stipulated date and time, it was the case of the petitioner that no such date or time had been communicated to them.
Shruti D. Vyas along with Aditya R. Deolekar appearing for the respondent revenue acceded to the fact that the show-cause notice was entirely vague and proceeded to produce what was meant to be an attachment to this show-cause notice. It was their case that the attachment contained details of the allegations and the petitioner had wilfully suppressed the fact that the attachment was provided along with the show-cause notice to the petitioner.
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The bench, comprising Justice M.S. Sonak and Justice Jitendra Jain observed that it was the duty of the petitioner to place on record the complete copy of the show-cause notice and not just a truncated version.
Further, the petitioner adduced screenshots from the portal which did not contain the attachment in the show-cause notice, which the revenue’s counsel attributed to technical glitches on the portal.
The Bombay High Court noted that a show cause notice must inform the noticee of the precise nature of the allegations so that an effective reply can be submitted. The bench pointed out that the notice in question merely made a generic allegation under Section 29(2)(e) and did not mention what specific act constituted the alleged fraud, wilful misstatement or suppression of facts.
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Relying on the principles of natural justice, the bench held that the impugned action could not be sustained on the basis of such a vague show cause notice.
Ultimately, the Court allowed the petition, set aside the order of cancellation of GST registration dated 7 July 2023 while granting liberty to the authorities to issue a fresh show cause notice containing proper particulars and follow-through on the adjudication.
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