M/S. 9 Star Traders vs. The Deputy Commissioner (St)

Held

The Court held that the impugned show cause notice dated 29.02.2024 is liable to be set aside because it does not disclose the minimum or elementary factual details on the basis of which power under Section 29 of the Act is invoked. The Court reiterated its previous findings in W.P.No.20080 of 2024 and other related cases, emphasizing that a mere reproduction of the offending clause or enabling provision is insufficient. Such cryptic notices violate the principles of natural justice by depriving the assessee of an effective opportunity to respond. The Court noted that the suspension of registration is founded upon this defective notice. Therefore, the show cause notice was set aside. Liberty was reserved to the respondents to proceed against the petitioner in accordance with the law. The Court expressed hope that authorities would sensitize themselves and avoid issuing such cryptic notices in the future, but did not impose costs in this instance.

Facts

The petitioner, M/s. 9 Star Traders, filed a writ petition challenging the action of the respondent authorities in suspending their GST registration. The challenge was directed against a show cause notice dated 29.02.2024, which was issued for the cancellation of registration. The petitioner contended that the show cause notice was issued without proper cause and necessary details, making it arbitrary, illegal, and violative of the principles of natural justice and constitutional provisions. The petitioner sought to have the show cause notice set aside and the suspension of their GST registration revoked. The petition also sought an interim order to suspend the operation of the show cause notice and allow the petitioner to file returns.

Key Issues

1. Whether the show cause notice for cancellation of GST registration, dated 29.02.2024, is void, arbitrary, illegal, and in violation of the principles of natural justice and constitutional provisions due to a lack of specific factual details? (Question of law and mixed fact and law, turning on Section 29(2)(e) of the Central Goods and Services Tax Act, 2017). Petitioner's contention: The show cause notice merely reproduces the statutory language of Section 29(2)(e) of the Act without disclosing the factual details of the alleged breach, thereby depriving the petitioner of an effective opportunity to reply. This is a cryptic notice and an example of non-application of mind, making it vulnerable. Revenue's contention: The learned Assistant Government Pleader fairly submitted that the issue is covered by a previous order of the High Court in W.P.No.20080 of 2024.