M/S Vidya Coal Depot vs. Additional Commissioner Grade (Appeal) Ii And Another

Held

The Court held that the impugned orders cancelling the petitioner's GST registration were unsustainable in law. The Court found that the revenue authorities had failed to provide the petitioner with copies of the directions from the TTZ authority and JC (SIB) B, which formed the basis for the cancellation. It was also noted that an appendix to the cancellation order was produced for the first time with the counter-affidavit, which had not been communicated to the petitioner or placed before the appellate authority. Citing the Supreme Court's decision in Mohinder Singh Gill vs. The Chief Election Commissioner, New Delhi, the Court stated that the revenue could not supplement fresh reasons through an affidavit. The Court observed that there was no finding that the petitioner had failed to maintain account books, a common requirement under the GST Act. In the absence of any established violation of Section 29 read with Rule 21 of the UPGST Act, the cancellation of registration could not be sustained. The Court relied on its previous judgment in Drs. Wood Products Lucknow, which emphasized the need for clear allegations in show-cause notices and proper reasoning in cancellation orders. Consequently, the Court quashed the impugned orders and issued a mandamus for the reinstatement of the petitioner's registration with effect from 18.08.2022, along with consequential benefits.

Facts

The petitioner, M/s Vidya Coal Depot, a coal dealer operating under the compounding scheme, had its GST registration cancelled by the Assistant Commissioner, Commercial Tax, Agra, on 14.10.2022, effective from 18.08.2022. This action was reportedly based on directions from the TTZ authority and JC (SIB) B, Agra. The petitioner appealed this order, but the appellate authority confirmed the cancellation on 01.12.2022. The petitioner sought restoration of its registration. The petitioner argued that it had not violated any GST provisions and that the cancellation was based on directions not provided to them. They also contended that the cancellation order lacked proper reasoning and that the authorities relied on documents not previously on record or communicated to them, including an appendix to the cancellation order and directions from the TTZ authority whose period had expired.

Key Issues

1. Whether the cancellation of the petitioner's GST registration under Section 29(2) of the U.P.G.S.T. Act, read with Rule 21 of the U.P.G.S.T. Rules, is sustainable in law, considering the alleged lack of proper reasoning and reliance on external, uncommunicated directions? Petitioner's arguments: The petitioner contended that the cancellation was based on directions from the TTZ authority and JC (SIB) B, Agra, copies of which were not provided. They argued that the cancellation order lacked specific reasons and contradicted itself regarding the submission of a reply. They also claimed the TTZ authority's directions were without jurisdiction as its tenure had expired. Furthermore, they asserted that the Environment (Protection) Act, 1986, under which the TTZ authority might have acted, was not applicable to a coal dealer. The petitioner relied on judgments like M/S Videocon D2h Ltd. vs. State of U.P., M.C. Mehta (Taj Trapaziam Matters) vs. Union of India, M/S Agra Coal Suppliers vs. State of U.P., and Drs. Wood Products Lucknow vs. State of U.P. to support their claims regarding procedural fairness and the scope of statutory provisions. Respondent's arguments: The respondent supported the impugned orders.