Ashok Kumar Vishwakarma vs. Union Of INDIA And Ors

Held

The Court held that both the order of cancellation of GST registration and the appellate order were in breach of the principles of natural justice. The Court found that the Superintendent failed to grant a personal hearing as mandated by the proviso to Section 29(2) of the CGST Act, 2017, and erroneously recorded that the Petitioner was heard when no hearing took place and no documents were filed. Furthermore, the Appellate Authority overlooked the Petitioner's specific grounds regarding the breach of natural justice and relied on fresh material, such as the Range Officer's report, which was not supplied to the Petitioner. The Court emphasized that the authorities must follow the proper procedure, including issuing a fresh show cause notice and granting an opportunity of hearing. The Court quashed and set aside both impugned orders and directed the restoration of the Petitioner's GST registration within three weeks. It clarified that the department could issue a fresh show cause notice if it intended to proceed with cancellation.

Facts

The Petitioner, Ashok Kumar Vishwakarma, challenged the cancellation of his GST registration. The Superintendent, CGST and Central Excise, Bhiwandi, issued a show cause notice on April 13, 2022, for cancellation of registration, citing the issuance of invoices without supply of goods/services. The Petitioner responded via email on April 14, 2022, requesting an adjournment as he was out of town and seeking to maintain status quo. The Superintendent proceeded to cancel the registration on May 4, 2022, without granting a hearing, despite erroneously recording that the Petitioner's reply and submissions were examined. The Petitioner's appeal against this order to the Appellate Authority was dismissed on January 23, 2023. The Petitioner contended that both orders were passed in breach of natural justice and that the Appellate Authority relied on fresh material not provided to him.

Key Issues

1. Whether the order cancelling the Petitioner's GST registration dated May 4, 2022, passed by the Superintendent, CGST and Central Excise, Bhiwandi, is illegal and in breach of the principles of natural justice, particularly concerning the lack of a hearing and non-furnishing of supporting documents, as contemplated under Section 29(2) of the CGST Act, 2017? 2. Whether the order dated January 23, 2023, passed by the Appellate Authority dismissing the Petitioner's appeal, is sustainable, given that it allegedly overlooked the Petitioner's grounds regarding the breach of natural justice and relied on fresh material not provided to the Petitioner? Petitioner's Arguments: The Petitioner argued that the initial cancellation order was bad and illegal due to a breach of natural justice, as no hearing was granted, no documents were furnished, and the order falsely stated that the Petitioner was heard. He further contended that the Appellate Authority failed to consider these grounds and relied on the Range Officer's report and other materials that were not supplied to him, thus also breaching natural justice. Revenue's Arguments: The Revenue supported the impugned orders, arguing that the Petitioner had wrongfully availed ITC from suppliers whose registrations were cancelled and who were under investigation. They claimed there were several documents on record, and the Petitioner had complete knowledge of the facts. The Revenue also noted the substantial tax liability involved.