Abans Commodities (I) PVT. LTD. vs. Union Of INDIA

Facts

The petitioner, Pantone Enterprises Private Limited, along with other writ applicants, challenged orders cancelling their GST registration. The petitioners were issued show cause notices for cancellation of registration, alleging fraud, wilful misstatement, or suppression of facts, and their registrations were suspended. The petitioners submitted replies, arguing the notices lacked specific reasons and details. However, the authorities proceeded to cancel the registrations. Subsequent appeals against these cancellations were also dismissed. The petitioners contended that the show cause notices and subsequent orders were passed without providing adequate opportunity for a hearing and lacked proper reasoning, especially during the COVID-19 pandemic. The authorities relied on reports indicating the petitioners had not provided grounds for revocation and mentioned fake Input Tax Credit as a reason for cancellation.

Held

The Court held that the show cause notices issued for cancellation of GST registration were bereft of material particulars and that the respondents failed to provide sufficient opportunity for a personal hearing, thereby violating the principles of natural justice. The Court noted that the notices were issued during the surge of the COVID-19 pandemic and that the petitioners had requested video conferencing for hearings. The Court found that the subsequent orders cancelling registration and rejecting revocation applications also lacked proper reasoning and failed to address the petitioners' grounds. Citing the precedent in Aggarwal Dyeing and Printing Works Vs. State of Gujarat and Ors., the Court quashed and set aside the impugned show cause notices, cancellation orders, and rejection orders for revocation. The Court granted liberty to the respondent authorities to issue fresh show cause notices with all material particulars and evidence, provide an opportunity for reply and personal hearing, and pass speaking orders. The Court explicitly stated that it had not gone into the merits of each case.

Key Issues

1. Whether the show cause notices issued for cancellation of GST registration were legally valid, considering they allegedly lacked material particulars and specific reasons, thereby violating principles of natural justice? (CGST Act, Section 29(2)(e) read with Rule 21 of CGST Rules, 2017) 2. Whether the orders cancelling the GST registration and the subsequent orders rejecting the applications for revocation of cancellation were passed in accordance with the principles of natural justice, particularly concerning the opportunity for personal hearing and the consideration of the petitioner's replies? Petitioner's arguments: The petitioners argued that the show cause notices were vague and did not provide sufficient details to enable them to respond effectively. They contended that the suspension and cancellation of registration severely impacted their business. They also argued that the authorities failed to provide a proper personal hearing, especially during the COVID-19 pandemic, and that the appellate orders were mechanical and did not address their contentions. They relied on the High Court's decision in Aggarwal Dyeing and Printing Works Vs. State of Gujarat and Ors. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or state. However, the orders passed by the authorities indicate they believed the registration was liable for cancellation based on instructions from the Preventive Section and reports concerning fake Input Tax Credit.