M/S. Al-Arif Milk Center vs. The State Of Telangana
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The petitioner, M/s. Al-Arif Milk Center, challenged the cancellation of its GST registration. The Deputy State Tax Officer (Respondent No. 4) cancelled the registration on 24.04.2023, with effect from 28.03.2023, based on a show cause notice dated 28.03.2023. The petitioner's appeal against this cancellation was rejected by the Appellate Joint Commissioner (ST) (Respondent No. 3) on 09.08.2024. The petitioner argued that the show cause notice was vague and lacked factual details, and the cancellation order contained contradictory statements regarding the petitioner's reply. The respondents contended that the appeal was filed beyond the prescribed time limit under Section 107 of the CGST Act.
Held
The Court held that the show cause notice dated 28.03.2023 was cryptic and lacked essential factual details, failing to provide the petitioner with adequate information to make an effective representation, thereby violating the principles of natural justice. The Court also noted that the cancellation order dated 24.04.2023 contained contradictory findings regarding the petitioner's reply to the show cause notice. Consequently, the Court found the impugned show cause notice, the cancellation order, and the appellate order to be unsustainable. The Court relied on Supreme Court judgments emphasizing the need for precise and unambiguous show cause notices and the fundamental principles of natural justice. The ratio decidendi is that a show cause notice must contain sufficient factual basis for the proposed action to comply with natural justice, and orders based on defective notices are liable to be set aside. The Court set aside all three impugned orders and reserved liberty to the respondents to proceed against the petitioner in accordance with law, stating that the limitation period would not impede fresh proceedings.
Key Issues
1. Whether the show cause notice dated 28.03.2023 for cancellation of GST registration was legally valid and complied with the principles of natural justice? (Question of law) 2. Whether the order dated 24.04.2023 cancelling the GST registration was vitiated by procedural infirmity and contradiction? (Question of mixed law and fact) 3. Whether the appellate order dated 09.08.2024, rejecting the petitioner's appeal, was justified? (Question of law) Petitioner's arguments: The show cause notice was cryptic, vague, and lacked necessary factual details, violating principles of natural justice. The cancellation order contained contradictory statements, stating both that a reply was received and that no reply was filed, thus violating principles of natural justice. The appellate order was also challenged. Respondents' arguments: The petitioner filed the appeal beyond the time limit prescribed under Section 107 of the Central Goods and Services Tax Act, 2017, which allows for condonation of delay only up to thirty days. Therefore, the appellate authority's decision was correct.
Sections Cited
Section 107, Section 29(2)(e)
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKA YARA WRIT PETITION No.262OL of 2o24 ORDER: (Per the Hon'ble the Acting Chief Justtce Sujog Paul) Sri Vedantam Sriramnivas, learned counsel appearing for Sri V.Raghunadh, learned counsel for the petitioner arrd Sri T. Chaitanya Kiran, learned Assistant Government Pleader representing Sri Swaroop Oorilla, learned Specia-l Government Pleader for State Tax appearing for the respondents.
With the consent, finally heard.
In this writ petition the show cause notice for cancellation of registration of the petitioner dated 28 .O3.2O23, the order dated 24.04.2023 cancelling the registration and the appellate order dated 09.08.2024 rejecting the petitioner's appeal are called in question
The principal argument of the learned counsel for the petitioner is that the show cause notice is cryptic in nature and it *4 d,oes not contain any factual details and only pregnant with 2 reproduction of the provision on the strength of whiclL action can be taken. Thus, the show cause notice is vague in nature. The order of cancellation dated 24.O4.2023 is assailed by contending that in the firs;t line, it is stated that the order was in reference to the petitioner's reply dated 13.04.2023 in response t,r the show cause notice dated 28.03.2023 and in the second iine, it is mentioned that no reply was filed. Thus, there exists a procedural infirmity ald violation of principles of natural jus;tice. The appellate order rs also under challenge.
Learned Special Government Pleader for State Tax submits that as per Ser:tion lO7 of the Centra_l Goods and Servic:es Tax Act, 2017, the appeal must be frled within ninetl,days and the appellate authority can condone the delay for thirty rnore days, whereas in th,s present case, the petitioner filed app,:al beyond four months. 'lhus, we do not find any error in t.he appellate order dated 09.O8.2C,24. 6. However, the fact remains that the appellate aut.horitv has ng! decided the appeal on merits. The impugned show cause
J notice certainly 1S cryptic in nature and does not contain necessary factual details. In W.P.No. l74OO of 2024, this Court at relevant paragraphs opined as under: .
The singular reason assigned in the impugned notice dated 29 .O2.2024 reads asunder:
"
Section 29(2)(e)-registration obtained by meals of fraud, willful misiepresintation or suppression of facts"' Apart from this bald statement, there exists nothing in the show cause notice which can throw light as to-what is the nature of .fraud, or \rillful misrepresentation, or .suppressron .ii".t' by the petitioner' Thus, show cause notice is cryptic and an example of non application of mind' In absence of factual basis and n"ce"s''ry details' notice becomes vulnerable.
This Court, recently, considered this aspect in T S R ExPorts (suProl) and held as under: 1O. Tlrc Apex Court expressed tLLe need of issuance of such niiii inZo""r" Bani us Debasis Dos [2003] 4 SCC 557' at para No . 1 5 , uhich reads tt-s under:
" 15. ...Notice is the first Limb of this prtnciPte. It must be Dreclse and u ous It should opt)rise the orlu deterlntna tiuelu o the case he hos to meeL Time f p giuen for the purpose slautd be adequote so as fo tn he thot the the ho or me o b o u)as dranan is show e out the the the e .s co lds r idered S on A can reo not not a LN and the s t
4 er.able him to make his representation. In the absence oJ a notice of the kind. and. such reasonablp, opporhtnitg, the order passed becomes urhottA uitiatecl.. TL,.us. it ts but essential tlut a partg should.Te put o,t natice of the cose before anA ad.uerse ord.er is passe,:l agalnst him. This is one of the most important pn'..naples of nah,Lral justice. tt is afi.er all an approuet:l ruie, of fair ptay. The concept hos gained. stgrit\cano:t and shades uith time..."
In the Rajesh Kumar us. CIT [2006] jS7 Taxn..tan !981?8_7 yR 91/ [2007] 2 SCC 1Bt, the Apex Court at pttra No.61, held as under: ce issued moy onlg contain bieJlA tfu. the assessing olfcer thinks to bt: reasons assigned therefor need not be:
"61. ...The noti issues uhich necessary. The detat[ed ones. But thot uLould not mean that tht, pn,"Lciples of iustice are not requiredtobe compliec'. tuith. Onlg because certain consequences uottld ensue, if the principles of natural justice are required to be con'Lptied uith, the same by itself utoutd, not ntean thal the court would not insist on complying uttth the fundamentat pinciples of laut..."
This Court in Sri Auanthika Sai Venkatct us. DepL.:.tA State 'l'o-y. Officer [202a] 159 tox.mann.com 23.5/ 83 GS'TL 311 (Telangana)/ lW.P.No.1596 of 2024, doted 23_1_20:,t41 and S.B. Traders us. The Supeintendent 120221 1,15 taxmann.com 556/ [2023] 96 cS? j 3/ 67GSTL' j75 (Telangana)/ lW.P.No 28-10-2'0221, interfe and ord.er therei s.39498 and 395O2 of 2022, dated red uLith the impuqned proceedin,xs n because the reasotT.s Luere not mentioned while in.itiatinq oroceedinqs t the oetitioners therein.
Needless to mention tlnt the shout cause notice dat:td O_9.1 1 2023 became the foundation for issuance of ord.ers dated 219.1 1.2023 and 25.02.2024, since the -foindati.tn connot sustain judiciaL scruting, the entire edifi.ce of orde,s passed thereupon are liable to be jettisoned". (Emphasis Su.pplied)
Sinc,: the show-cause notice and suspensi,tn of registratiorr is founded upon a cryptic notice dated 29.02.2022:-, both are set aside. On regular basis, rve are painfully r)oticing this kind of noticesl whereby, w ithout assigning adequate reasons, the business of taxpa,r'er is suddenl" suspended. In absence of basic reasons avtrilable
ry 5 in the show-cause notice, the party aggrieved by it cannot even prefer an effective representation. We wonder how in such an insensitive and mechanical manner, the registrations are being suspended by issuing defective show- cause notices. Such orders certainly have an adverse impact on the livelihood of taxpayer and hits Article 2 1 of the Constitution. The authorities must remind themselves that the words 'LIFE' and 'FILE' contain same letters. Every hle has a nexus with somebody's 'life' or liberty. Thus, the authorities should sensitize themselves and should not pass order/notice in the mechanical manner it is passed in the present case. We hope and trust that, henceforth, the authorities will take care of this aspect. karned counsel for the petitioner insisted for imposition of costs. Faced with this, Sri P.Sri Harsha, learned Assistant Government Pleader, submits that he will appraise the authorities about observation of this Court so that henceforth such mistakes do not occur. In view of this assurance, in the instant case, we are not imposing any costs on the respondents.
Resultantly, the impugned show-cause notice dated 29.O2.2024 and the order suspending the registration are set aside. Liberty is reserved to the respondents to proceed against the petitioner in accordance with law."
It was the minimum expectation from the authority who has issued the show cause notice to mention the factual details on the strength of which, violation is alleged and action is proposed to be taken. The authority has miserably failed to undertake the a-foresaid exercise which runs contra-ry to principles of natural justice. The cancellation order dated 24.O4.2023 is founded upon a defective show cause notice and is also pregnant with I , I l I contradictory findings.
6
Thus, t.ee impugned show cause notice dated ,28.03.2023, the order dated 24.04.2023 and the appellate c,rder dated O9.O8.2O24 are set aside. Liberty is reserved to the respondents to proceed against the petitioner in accordance with law. The limitation will not come in the way of the revenue while proceeding afresh against the petitioner. I O. Accordingly, the writ petition IS disposed of without expresslng any' opinion on the merits of the case. No costs. Miscella-r:Leous petitions pending, if any, shall stand closed. .P. CH. NAGABHUSHAMBA //// {STANT REGISTRAR SECTION OFFICER To,
BM LS 1 2 'l 4 5 6 The Principal Secretary Revenue Department Commercial Taxes Telangana Secretariat,T.S;., Hyderabad. The Commissioner of State Taxes, C.T Complex, Nampally, Hyderabad. !!-9 npqe_llgtg.loint Commissioner(ST), Secunderabad Diirisioh Hyderabad, Office at 5th Floor, C.T Complex, Nampally, Hyderabad The Deputy State Tax Officei, Sangardddr-ll eircte, Nizamabad Division. One CC to SRr. V. RAGHUNADH,-Advoc-ate tOpUCI TTiIIo CCs to SF,ECIAL GoVERNMENT PLEA-DER FbR STATE TAX, High Court forthe State of Telangana, at Hyderabad [OUT] Two CD Copiesr nl\{ff ?
HIGH COURT DATED:1110312025 ORDER WP.No.26201 of 2024 DISPOSING OF THE WRIT PETITION WITHOUT COSTS (1. g. Tt{E g r4 Dr tcuF-D 03 tpn ZW 11\( o t .c ^ q 6- 3 ,-> (ao 1II
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.