Manvi vs. Union Of INDIA And Ors.

Held

The Court held that the cancellation of GST registration on the ground of being included in the "Risky Exporters Category" in a DGARM report is not a permissible reason under the CGST Act, 2017. Furthermore, the Court found the impugned order dated September 26, 2022, to be unsustainable. The reasoning was that the order clearly indicated it was passed merely on the direction of another authority, specifically the DC (Anti Evasion), without the concerned officer independently applying their mind to the reasons for cancellation. The order also failed to provide any specific grounds for the cancellation. Consequently, both the show cause notice and the order of cancellation were set aside. The Court, however, clarified that the concerned authority is not precluded from issuing a fresh show cause notice and passing a fresh order after considering the petitioner's reply and affording her a full opportunity of being heard.

Facts

The petitioner, Manvi, filed a writ petition challenging a show cause notice dated November 24, 2021, proposing to cancel her GST registration, and the subsequent order dated September 26, 2022, which cancelled her registration. The show cause notice was issued by Respondent No. 4, citing the reason "Non-existent Taxpayers under Risky Exporters Category in DGARM Report." The petitioner had responded to the notice, stating that her principal place of business was sealed due to unauthorized use of premises and that she had applied for and obtained an additional place of business. The impugned order for cancellation stated that the decision was made "AS PER direction received vide LETTER BEARING NO.DW/GST/AE/PE/STF/EXPORT VERF/297/2019-20 /15376 DT. 09.11.2021 RECEIVED FROM DC (ANTI EVASION)."

Key Issues

1. Whether the cancellation of GST registration on the sole ground of being included in the DGARM report of risky exporters is permissible under the CGST Act, 2017? 2. Whether the impugned order cancelling the petitioner's GST registration is vitiated by the fact that it was passed merely on the direction of another authority without independent application of mind? The petitioner argued that there is no provision in the CGST Act that permits cancellation of registration solely based on inclusion in a "risky exporters" list. She contended that the impugned order was passed mechanically on the direction of another authority (DC, Anti Evasion) without the concerned officer satisfying himself about the reasons for cancellation. The revenue/respondents did not record any specific arguments in the judgment.