Sree Nandi Granites vs. Joint Commissioner Of GST (Appeals)

WP/146/2023HC KarnatakaGSTCNR KAHC01000833202302 February 2023Bench: B M SHYAM PRASAD5 pages

For Petitioner: SRI. MAHESH R UPPIN, ADVOCATEFor Respondent: SRI.JEEVAN J. NEERALGI., ADVOCATE

AI SummaryAllowed

Facts

The petitioner, Sree Nandi Granites, filed a writ petition challenging two orders: an order dated 13.10.2020 by the Superintendent of Central Excise and Central Tax (R2) cancelling its GST registration, and an order dated 19.10.2022 by the Joint Commissioner of GST (Appeals) (R1) rejecting the petitioner's appeal against the cancellation order. The appeal was rejected solely on the grounds that it was filed beyond the statutory time limit, and the merits of the cancellation order were not examined. The petitioner contended that it did not receive the show cause notice for cancellation and thus had no opportunity to respond, despite a contradictory reference in the cancellation order.

Held

The Court held that the order dated 13.10.2020 cancelling the petitioner's GST registration was liable to be quashed. The reasoning was based on the contradictory statements within the cancellation order itself, which indicated a purported reply on the same day as the cancellation, followed by a statement that no response was received. This, coupled with the petitioner's assertion of non-service of the show cause notice, supported the petitioner's claim of lack of opportunity. The Court found that the proximity between the date of the notice (01.10.2020) and the date of cancellation (13.10.2020) further weakened the revenue's defense. The ratio decidendi is that a cancellation order passed without affording a proper opportunity to the assessee to respond to the show cause notice, especially when the order itself contains contradictory statements regarding the response, is unsustainable. The Court quashed the order dated 13.10.2020 and restored the proceedings to the second respondent for reconsideration of the cancellation of registration. The petitioner was directed to appear on 27.02.2023 and was permitted to file objections. The petitioner was also to be put on terms.

Key Issues

1. Whether the order dated 13.10.2020 cancelling the petitioner's GST registration is liable to be quashed on the ground of lack of opportunity to respond to the show cause notice, as contemplated under the relevant provisions of the GST Act and Rules. Petitioner's arguments: The petitioner argued that the cancellation order dated 13.10.2020 was passed without providing an opportunity to respond to the show cause notice. It highlighted contradictory statements within the order itself, suggesting a purported reply on the same day as cancellation, followed by a statement that no response was received, despite the petitioner claiming non-service of the notice. The petitioner contended that if the initial cancellation order is set aside on these grounds, the appellate order, which was dismissed solely on delay, would not be an impediment. Revenue's arguments: The respondent revenue department attempted to refute the petitioner's assertion of lack of opportunity or application of mind, arguing that there was a response on 13.10.2020, the same day the registration was cancelled. However, the Court noted that contradictory statements in the impugned order and the proximity of dates belied this defense.

Sections Cited

Section 129

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

- 1 - WP No. 146 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 146 OF 2023 (T-RES) BETWEEN: SREE NANDI GRANITES (FIRM REG. UNDER INDIAN PARTNERSHIP ACT) NEAR GOVT. P.U. COLLEGE, GOPADY VILLAGE, KOTESHWARA, KUNDAPURA TALUK, UDUPI DISTRICT-576 222. REP. BY MG. PARTNER – MR. PRASHANTH SHETTY. …PETITIONER (BY SRI. MAHESH R UPPIN, ADVOCATE) AND: 1. JOINT COMMISSIONER OF GST (APPEALS) OFFICE OF THE COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE (APPEALS), NO.71, CLUB ROAD, BELAGAVI-590 001. 2. THE SUPDT. OF CENTRAL EXCISE AND CENTRAL TAX LVO 290, KUNDAPURA, UDUPI DISTRICT-576 201. Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 146 of 2023 3. DY. COMMISSIONER OF CENTRAL EXCISE AND CENTRAL TAX UDUPI DIVISION, VISHNU PRIYA BUILDING, L.B.S. MARG, AJJARKAD, UDUPI-576 101. …RESPONDENTS (BY SRI.JEEVAN J. NEERALGI., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 1.10.2020 BEARING REFERENCE NUMBER ZA291020430158X PASSED BY THE R2 MARKED AS ANNEXURE-B AND THE ORDER IN APPEAL BEARING NO.BGM-JJ-JC-19-2022-23-GST (APPEAL NO.29/2022/MR/GST) DATED 19.10.2022 ISSUED BY THE R1 MARKED AS ANNEXURE-G. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The petitioner’s GST registration is cancelled by order dated 13.10.2020 [Annexure-B,] and the petitioner’s appeal as against this order is rejected by the first respondent on 19.10.2022 essentially on the ground that the petitioner’s appeal is beyond the time provided for under the Statute. The petitioner’s grievance as against the order dated 13.10.2020 is not examined on merits.

- 3 - Sri. Mahesh R Uppin, the learned counsel for the petitioner, submits that even from the impugned order dated 13.10.2020, it can be seen that the petitioner did not have the opportunity to respond to the Show Cause Notice for cancellation, and in this regard he submits that if in the first part of the order dated 13.10.2020, there is a reference to a purportedly reply of the petitioner on 13.10.2020, in the very next sentence, it is recorded that the petitioner has not responded to the Notice when in fact, the petitioner is not served with the Notice.

Sri. Mahesh R Uppin further submits that because the petitioner can demonstrate both lack of notice and application of mind, this Court must interfere with the first order dated 13.10.2020, and if this Court is persuaded to interfere with this order on these grounds, the order in appeal will not be an impediment because it is dismissed only on the ground of delay.

- 4 - Sri. Jeevan J Neeralgi, the learned counsel for the respondent, attempts to refute the assertion that there is lack of opportunity or application of mind contending that there is response on 13.10.2020 and on the very day the registration is cancelled. However, the contradictory statements in the impugned order as also the proximity between the date of the Notice dated 01.10.2020 and the date of cancellation of registration dated 13.10.2020 belies the defense while supporting the petitioner’s case. Therefore, this Court must interfere with the order dated 13.10.2020 and restore the proceedings for reconsideration by the second respondent with the observation that the consideration of the petitioner’s cause against cancellation shall not be returned on the ground that the appeal is dismissed. The petitioner must also be put on terms. Hence the following:

- 5 - ORDER

[a] The petition is allowed, and the impugned order dated 13.10.2020 [Annexure-B] is quashed restoring the proceedings to the second respondent for reconsideration of the question of cancellation of the petitioner’s registration in the light of this Court’s observation. [b] The petitioner shall appear before the second respondent without further notice on 27.02.2023, and shall also be at liberty to file statement of objections, if any, on such date. JUDGE

AN/-

Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.