M/S Ram Krishna Garg Supplier vs. State Of U.P. And 4 Others

Held

The Court held that the impugned orders cancelling the petitioner's GST registration were unsustainable in law. The show cause notice dated July 9, 2021, issued under Section 29(2)(a) of the Act, was found to be vague as it failed to specify the exact provisions of the GST Act or Rules that the petitioner allegedly contravened. The Court emphasized that for a drastic measure like cancellation of registration, which has severe civil consequences and impacts the fundamental right to do business, the assessee must be informed of specific allegations and confronted with any adverse material. Since this was not done, the proceedings were deemed irregular and initiated without the existence of jurisdictional facts. The reference to the earlier notice dated June 8, 2021, in the appeal order was considered irrelevant as it was not mentioned in the cancellation notice. Consequently, the Court quashed the impugned orders and allowed the writ petition, directing the restoration of the petitioner's registration. The revenue was granted liberty to initiate fresh proceedings if warranted, based on cogent material.

Facts

The petitioner, M/s Ram Krishna Garg Supplier, filed a writ petition challenging the order dated September 23, 2021, passed by the Additional Commissioner (Appeal), Trade Tax, Banda, which confirmed the order dated July 20, 2021, passed by the Assistant Commissioner, Banda Sector Trade Tax, Banda. The latter order cancelled the petitioner's GST registration under Section 29(2)(a) of the U.P. Goods and Services Tax Act, 2017. The cancellation was based on a show cause notice dated July 9, 2021, alleging non-compliance with provisions of the GST Act or Rules. Prior to this, a notice dated June 8, 2021, had mentioned infractions under other laws related to service contracts. The petitioner had submitted a reply to the initial notice. The impugned orders were passed without the revenue authorities providing specific details of the alleged violations or confronting the petitioner with adverse material.

Key Issues

1. Whether the show cause notice dated July 9, 2021, issued under Section 29(2)(a) of the U.P. Goods and Services Tax Act, 2017, was vague and legally unsustainable for failing to specify the exact provisions of the Act or Rules allegedly contravened by the petitioner? 2. Whether the cancellation of the petitioner's GST registration, a measure with serious civil consequences, was vitiated by the lack of specific allegations and the failure to confront the petitioner with adverse material, thereby rendering the proceedings irregular and lacking jurisdictional facts? Petitioner's Arguments: The petitioner argued that the show cause notice was vague and did not disclose the specific violations of the GST Act or Rules, thus preventing them from effectively responding. They contended that cancellation of registration is a harsh penalty with severe civil consequences, impacting their fundamental right to do business, and thus requires specific allegations and due process. The petitioner asserted that they were not confronted with the substance of the alleged violations or the material forming the basis for such allegations, making the entire exercise irregular. Revenue's Arguments: The revenue did not file a counter affidavit. The judgment notes that the appeal order referred to allegations from an earlier notice dated June 8, 2021, concerning infractions under other laws, but this notice was not referenced in the cancellation notice.