M/S.Enaya Metals Private Limited vs. The Deputy State Tax Officer
Original PDF →Facts
The petitioner, M/s. Enaya Metals Private Limited, challenged an order dated 16.11.2023 by the Deputy State Tax Officer, Hyderabad, cancelling its GST registration effective from 18.04.2023. The petitioner argued that a show cause notice was issued on 26.07.2023, to which they replied. The authorities initially dropped the proceedings on 26.10.2023. However, on the same day, a fresh show cause notice was issued. The petitioner submitted a reply on 01.11.2023, but the impugned order stated no reply was received. The petitioner contended that the subsequent show cause notice did not disclose reasons for re-issuance after dropping proceedings, and the opportunity to appear was less than 24 hours, violating natural justice. The revenue stated that incriminating information was received after dropping the initial proceedings, and an error in the effective date of cancellation led to dropping the first notice.
Held
The Court held that the impugned order dated 16.11.2023 was violative of the principles of natural justice. Firstly, the subsequent show cause notice dated 26.10.2023 did not disclose the justification for dropping the earlier proceedings and re-issuing a fresh notice. Secondly, although seven days were granted for a reply, the petitioner was directed to appear within less than 24 hours, which is unreasonable. Most importantly, the petitioner's reply dated 01.11.2023, which was submitted and even referenced in the impugned order, was not considered or appreciated while passing the order of cancellation. For these reasons, the Court found the order to be bad in law. The Court quashed the impugned order. However, since the quashing was solely on the ground of violation of natural justice, the respondent authorities were granted liberty to initiate appropriate proceedings afresh, in accordance with law, if they so desired. The Court did not decide on the merits of the cancellation itself.
Key Issues
1. Whether the cancellation of GST registration by the Deputy State Tax Officer on 16.11.2023, without considering the petitioner's reply dated 01.11.2023 and without providing an adequate opportunity of being heard, is arbitrary and in violation of the principles of natural justice and the provisions of the Central Goods and Service Tax Act, 2017? Petitioner's arguments: The petitioner contended that the impugned order was bad because the subsequent show cause notice dated 26.10.2023 did not disclose reasons for its issuance after the earlier proceedings were dropped on the same day. Furthermore, the petitioner was directed to appear on the very next day, which is less than the seven days granted for a reply, violating natural justice. Crucially, despite submitting a reply on 01.11.2023, the impugned order erroneously stated no reply was received. Revenue's arguments: The revenue argued that after the initial proceedings were dropped on 26.10.2023, certain incriminating information was received, necessitating the issuance of a fresh show cause notice. Another reason for dropping the first proceedings was an erroneous reflection of the effective date of cancellation.
Sections Cited
Section 29, Central Goods and Service Tax Act, 2017
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following: ORDER
THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUI(ARA'NT.II W.P. No.34958 of2023 ORDER: pe' ao n'ble Sri Justtce P.SA-I9I KOSII'|) Heard Mr.Shaik Jeelani Basha, learned counsel appeared on behalf of Mr.Venkatram Reddy Mantur, Mr'Bhaskar Reddy, learned Assistant Government Pleader for respondent Nos' 1 to 3 and Mr.B.Mukharjee, learned counsel appeared on behalf of MR'Gadi Praveen Kumar, learned Deputy Solicitor General of India for respondent No.
Perused the material available on record'
The instant writ petition is hled challenging the order dated 16.11.2023, whereby the GST registration of the petitioner stands canceled with effect from 18.04.2023. 3. The contention of the iearned counsel for the petitioner is that the respondent authorities at the first instance have issued a show cause notice on 26.07 -2023, seeking the explanation from the petitionerastowhytheGsTregistrationshouldnotbecanceled.The petitioner contends that he had given his explanation to respondent authoritiesandtherespondentauthoritiesbeingsatislredwiththe same had decided to drop the proceedings uide order dated 26.10.2023, as would be evident from annexure P-4 enclosed along with the writ Petition.
2
The further contention of the learned counsel for the petitioner is that on the very sarne day, in the late evening, the respondent authorities again issued a fresh show cause notice following which the peritioner again submitted his reply on ol.ll.2o23 and inspite of the said reply being accepted by the respondents and which is also reflected from the impugned order, but the impugned order has been passed on 16. 1 1.2023 specifically hotding that there was no reply submitted by the petitioner to the show cause notice issued by the Department and in the process, the respondents have issued the order of cancellation of the registration of GST with effect from t8.o4.2023. 5. Learned counsel for the petitioner further submits that the impugned order is bad. Firstly, for the reason that the. subsequent show cause notice which was issued on 26.10.202S, does not disclose the reasons which necessitated the issuance of the show cause notice after dropping of the earlier notice vide order dated 26 'lO '2023 passed on the very same day. It was secondly contended that though the show cause notice dated 26.10-2023 has been issued calling for the reply within seven (O7) days, but the petitioners were directed to appear before the authorities on the very next day at 1l:13 hours, which again is in violation of the principles of natural justice' 6 Lastly, it was contended that the said subsequent show cause notice dated 26.10.2023 also, the petitionqas had submitted their
3 reply on Ol.ll.2023 as would be evident from reference number grven in the impugned order. Yet there is a {inding that there has been no response from the part of the petitioner to the show cause notice issued on 26.10.2023. The reply dated 01 11'2023 again has been enclosed along with the writ petition itself marked as Ex-PS'
Perusal of the pleadings and the documents enclosed along with the rvrit petition, though the facts stands undisputed' but the learned counsel appearing for the Department submits that after the earlier proceedings having been ordered to be dropped on 26'10'2023 certain incriminating information were received by the Department' which compelled the authorities to drop the proceedings at the first instance i.e., on 26.o7.2023. Another reason for dropping the proceedirrgs was for the reason that the effective date from which the registration had to be canceled was erroneously reflecte d' at 3l'O7 '2023' whereas it ought lto have been from 18'04 2023' These were the two reasons I which'lead to the dropping of the proceedings and the subsequent issuance of a fresh show cause notice also'
The impugned order dated 16' 1 l '2023 ' the subsequent show cause notice dated. 26'10'2023, both do not disclose either these facts giving justilication of dropping of the proceedings' Moreover' the subsequent show cause notice though mentions that seven days time is granted, but the petitiorler was directed to appear before the respondent authorities within less than 24 hours of time' which , I
4 -\ apparently compels this Court to reach to the conclusion that there has been violation of principles of natural of justice. Firstly, for not giving reasonabre time for the petitioner to respond to the show cause notice and secondly, the reply which the petitioner had submitted not having been considered or appreciated while passing the impugned order on 16.11.2023. For both the reasons, we are inclined to allow the writ petition and set aside/quashed the impugned order with consequence to follow. Since this Court is quashing the order only on ground that the same being violative of principles of nattrral justice, the respondent authorities would be at liberty to initiate appropriate proceedings afresh, in accordance with law, if they so want.
Accordingly, this Writ petition stands ailowed. No order as to costs. 10 stand closed Consequenfly, miscellaneous petitions pending, if any, shall M ASSISTANT ISMAIL ISTRAR OHD. //II To, SECTION OFFICER i,ff ffff"$g$idrH{ff.Js*18+f Bsf; [*?#!l#lshrsecre,ara, f 5l? B?iis'?*llvE?ufl,,ua, New De,hi 6.R*^",5A",S1:SiBmlmyA,=,?3J^[Bly3diJifs,fi L.J#="J^.-o. 7 Two CD Copies GJP
HIGH COURT DATED:0210112024 ORDER WP.No.34958 of 2023 ALLOWING THE WRITPETITION WITHOUT COSTS n @c,gln^ 6e$- 4 <. * 1) -.i\ .v- \:/ L
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.