M/S Matah Shree Associates vs. The State Of U.P. And 2 Others
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The petitioner, M/s Matah Shree Associates, was granted GST registration and was conducting business. The respondents issued a show cause notice on 25.06.2021 alleging that the principal place of business was not found during a field visit. The petitioner failed to file a reply, and an order cancelling their registration was passed on 06.07.2021. Subsequently, the petitioner applied for revocation of the cancellation. A fresh show cause notice was issued, proposing rejection of the revocation application due to the petitioner's failure to upload supporting documents like a CTO Survey report. An order dated 29.09.2021 rejected the revocation application. An appeal against this order was dismissed on 19.10.2022 due to limitation. The petitioner challenged all three orders: dated 06.07.2021, 29.09.2021, and 19.10.2022.
Held
The Court held that the cancellation of registration cannot be resorted to unless the conditions specified under Section 29(2) of the GST Act are made out. It was further held that even if the conditions stipulated under Section 29 are met, it is incumbent upon the respondents to record reasons while passing the order of cancellation. Since the order dated 06.07.2021 lacked recorded reasons and the petitioner's arguments regarding the unsubstantiated allegations and lack of proper procedure were considered valid, the Court found the orders to be unsustainable. Following the principles laid down in the cited cases of M/s DRS Wood Products and M/s Chandra Sain, the writ petition was allowed. The orders dated 06.07.2021, 29.09.2021, and 19.10.2022 were quashed. The matter was remanded to the assessing authority to pass fresh orders in accordance with the law, with a direction to supply all collected survey documents to the petitioner before passing the fresh order.
Key Issues
1. Whether the order cancelling the petitioner's GST registration dated 06.07.2021 was passed without proper application of mind and adherence to the conditions stipulated under Section 29 of the GST Act? 2. Whether the order rejecting the petitioner's application for revocation of registration dated 29.09.2021 was sustainable, given the alleged lack of specific details regarding the survey and the nature of supporting documents required? The petitioner argued that the order cancelling registration was passed without recording reasons and that the allegations regarding the principal place of business were unsubstantiated, as details of the survey (time, place, surveyor) were not provided. They contended that none of the conditions under Section 29(2) were met. The petitioner relied on the judgments in M/s DRS Wood Products Lucknow vs. State of U.P. and Writ Tax No.147 of 2022 (M/s Chandra Sain vs. UOI). The respondents did not record any specific arguments in the judgment.
Sections Cited
Section 29, Section 30
AI-generated summary — verify with the full judgment below
Court No. - 6 Case :- WRIT TAX No. - 17 of 2023 Petitioner :- M/S Matah Shree Associates Respondent :- The State Of U.P. And 2 Others Counsel for Petitioner :- Vishwjit Counsel for Respondent :- C.S.C.
Hon'ble Pankaj Bhatia,J.
Heard Sri Vishwjit the counsel for the petitioner and Sri Ravi Shanker the counsel for the respondents.
The present petition has been filed by the petitioner stating that the petitioner was granted the registration and was carrying out the business, however, a show cause notice was sent by the respondents on 25.06.2021 alleging that the principal place of business was not found available at the time of field visit. The petitioner could not filed the reply to the said show cause notice, however, an order came to be passed cancelling the registration on 06.07.2021 (Annexure no.4).
He draws my attention to argue that no reasons have been recorded while passing the order of cancellation. It is stated that thereafter the petitioner moved an application for revocation of the cancellation of registration as provided under section 30 of GST Act. On the said application, once again a show cause notice was given to the petitioner proposing to cancel the registration. The reasons given in the show cause notice are as under : "This has reference to your application dated 19/08/2021 regarding revocation of cancellation of registration. Your application has been examined and the same is liable to rejected for the following reasons:- 'any supporting document - others (please specify) - Upload CTO Survey report'."
It is stated that thereafter an order dated 29.09.2021 came to be passed rejecting the application for revocation on the ground that he had not filed the reply to the show cause notice. The petitioner preferred an appeal against the said order, which was dismissed on the ground of limitation vide order dated 19.10.2022.
In the present petition, the petitioner has challenged the order dated 06.07.2021 and the order dated 29.09.2021 as well as the order dated 19.10.2022. Submission of the counsel for the petitioner is that the order cancelling the registration is founded on the allegation that the principal place of business was not found/available at the time of Writ Tax No.147 of 2022 (M/s Chandra Sain vs. UOI) decided on 22.09.2022. Considering the submissions made at the bar and on perusal of the provisions contained in Section 29 of the Act, it is clear that the cancellation of the registration cannot be resorted to unless the conditions specified under section 29(2) are made out.
It is well settled that even if the conditions stipulated under section 29 are made out, it is incumbent upon the respondents to accord the reasons while passing the order, which have not been done, as such, following the law as explained in the case of M/s DRS Wood Products (supra) and M/s Chandra Sain (supra), the writ petition deserves to be allowed.
Accordingly, the writ petition is allowed. Orders dated 06.07.2021, 29.09.2021 and 19.10.2022 are quashed.
The matter is remanded to the assessing authority to pass the fresh orders in accordance with law. The respondents shall supply whatever documents have been collected in the survey, to the petitioner before passing the fresh order, as directed above.
Order Date :- 22.3.2023 VNP/- VISHVANATH PRASAD SHUKLA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.