M/S Zahid Scrap Traders vs. State Of Uttar Pradesh And Another

Facts

The petitioner, M/S Zahid Scrap Traders, is challenging an order dated December 5, 2023, passed by the Deputy Commissioner, State Taxes, Sector-1, Sambhal, under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner's GST registration was cancelled on January 14, 2019, and no business was conducted thereafter. A show cause notice was allegedly uploaded on the GST portal, leading to the impugned order. The petitioner contends that once registration is cancelled, they are not obligated to monitor the portal, and any notice must be served through alternative means. The tax period in dispute is FY 2017-18.

Held

The Court held that there was a violation of the principle of natural justice. The reasoning was that once a petitioner's GST registration is cancelled, they are not obligated to check the GST portal. The mode of service of any show cause notice must be through alternative means to the petitioner. The Court found itself in agreement with the principle enunciated by a coordinate Bench in M/s Katyal Industries v. State of U.P. and others. Consequently, the impugned order dated December 5, 2023, passed by the respondent No.2, was quashed and set aside. The department was granted liberty to issue a proper notice to the petitioner and proceed in accordance with the law. The ratio decidendi is that proper service of notice, especially when registration is cancelled, is a prerequisite for valid adjudication under Section 73 of the Act, and portal upload alone is insufficient if not supplemented by alternative service.

Key Issues

1. Whether the service of a show cause notice uploaded on the GST portal is sufficient when the petitioner's GST registration has been cancelled and no business is being conducted, thereby violating the principles of natural justice, under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner argues that after the cancellation of their GST registration on January 14, 2019, they were not obligated to check the GST portal for any notices. They contend that the mode of service of any show cause notice must be through alternative means to the petitioner. They rely on the principle enunciated by a coordinate Bench of the High Court in M/s Katyal Industries v. State of U.P. and others, Neutral Citation No.2024:AHC:23697-DB. Revenue's arguments: The judgment does not record any specific arguments made by the respondent revenue.