M/S M.S.Retail Private Limited vs. The Union Of INDIA

Held

The Court held that the writ petition was not maintainable. It noted that the petitioner had withdrawn its challenge to the constitutional validity of the CGST Act and Rules. The Court found that Section 107 of the CGST Act provides a clear remedy of appeal against any decision or order passed under the Act. The Court observed that the order dated July 10, 2020, rejecting the revocation application, was a speaking order that recorded reasons and was passed after a personal hearing. The communication dated July 21, 2020, was merely an intimation of this decision. The Court found no jurisdictional error in the proceedings or violation of natural justice. Therefore, if the petitioner was aggrieved by the order dated July 10, 2020, it ought to have filed an appeal under Section 107 of the CGST Act, rather than pursuing a writ petition. The Court dismissed the writ petition but granted the petitioner liberty to prefer an appeal under Section 107 within thirty days, making it clear that no opinion was expressed on the merits of the case.

Facts

M/s M.S. Retail Private Limited, a registered taxable person under the CGST and KGST Acts, engaged in trading bath fittings and sanitary ware, filed a writ petition challenging the show cause notice for cancellation of its GST registration, the subsequent order of cancellation, and the rejection of its application for revocation of cancellation. The petitioner contended that it was unaware of the initial show cause notice dated March 18, 2020, due to the COVID-19 lockdown and could not appear before the authorities. Its registration was cancelled effective June 6, 2020. After a previous writ petition (W.P.No.8167/2020) directed the petitioner to file a revocation application, the authorities issued a notice and subsequently rejected the revocation application. The petitioner also initially challenged the constitutional validity of certain CGST Act and Rules provisions but later withdrew that prayer.

Key Issues

1. Whether the show cause notice dated March 18, 2020, and the order of cancellation of registration dated June 6, 2020, are liable to be quashed on grounds of jurisdictional error and violation of principles of natural justice, considering the petitioner's inability to appear due to the COVID-19 lockdown? (Section 29, Section 168, Rule 22(1) of CGST Act/Rules). 2. Whether the notice dated July 3, 2020, issued pursuant to this Court's order in W.P.No.8167/2020, and the subsequent order dated July 10, 2020, rejecting the revocation application, are erroneous and violative of natural justice and the CGST Act/Rules? (Section 30, Section 29, Rule 21(b), Rule 23 of CGST Act/Rules). Petitioner's arguments: The petitioner argued that the initial show cause notice was not received due to the lockdown, leading to an ex-parte cancellation. The subsequent notice and rejection of revocation were also flawed, particularly the communication dated July 21, 2020, which wrongly stated non-receipt of reply. The petitioner also highlighted a pending demand notice dated December 23, 2019, which should have been adjudicated before cancellation. Respondents' arguments: The respondents contended that the writ petition is not maintainable as Section 107 of the CGST Act provides an alternative appellate remedy. They argued that the show cause notices and orders were issued by proper officers with jurisdiction, without violating natural justice. They further stated that recovery proceedings and cancellation of registration are separate actions and do not require prior adjudication of liability.