Arsh Traders Through Proprietor Aslam Sodagarbhai Shekh vs. Commercial Tax Officer, Ghatak 65, Surat

Held

The Court held that the respondent authority had failed to follow the prescribed procedure for deciding the application for revocation of cancellation of registration. The petitioner had filed the revocation application on 16.08.2019, but the proper officer had not issued any show cause notice indicating an intention to reject it, nor had the application been decided within the statutory limits. The Court noted that the rules provide specific timelines for the disposal of such applications. If the officer intended to reject the revocation, a notice (GST REG 23) would be required, followed by a decision within 30 days of receiving the applicant's response. If the officer agreed with the revocation request, it should be decided within a week. The Court directed the proper officer to decide the application within one week from the receipt of the copy of the order. The Court explicitly stated that it had not gone into the merits of the matter.

Facts

The petitioner, Arsh Traders, obtained a GST registration on July 7, 2018. A show cause notice for cancellation of registration was issued on June 24, 2019, alleging fraud, willful misstatement, and suppression of facts. The petitioner claims not to have received a physical copy of this notice. Subsequently, on July 26, 2019, the petitioner's registration was cancelled without any stated reason and allegedly without following due procedure. An application for revocation of this cancellation was filed on August 1, 2019, which remained undecided. The petitioner also filed a grievance on the CGPGRAMS portal on January 24, 2021. The petitioner stated that all GST returns were filed up to June 2019. The petitioner had also been granted bail on September 5, 2019, in connection with charges of fake purchases by the DGGI, Surat, with no charge-sheet filed subsequently.

Key Issues

1. Whether the order dated 26.07.2019, cancelling the petitioner's GST registration, is liable to be quashed for non-compliance with the prescribed procedure under the CGST Rules, 2017, specifically Rule 22(3)? 2. Whether the respondent authority has failed to decide the petitioner's application for revocation of cancellation of registration within the statutory time limits prescribed under the CGST Rules, 2017? Petitioner's arguments: The petitioner contended that the cancellation order was issued without following the procedure under Rule 22(3) of the CGST Rules, 2017, as the show cause notice was not in the prescribed form GST REG 19. Furthermore, the petitioner argued that its application for revocation of cancellation, filed on 01.08.2019, has not been decided by the respondent authority, contrary to the CGST Rules, 2017. Respondent's arguments: The respondent, represented by the learned AGP, had no instructions regarding the decision on the pending revocation application or the outcome of the criminal proceedings. However, the learned AGP did not dispute the procedural requirements for deciding a revocation application, acknowledging that the proper officer must record reasons in writing and issue notices (GST REG 23 and GST REG 24) if the application is to be rejected, within prescribed timelines.