Shree Sanwariya Impex Through Prop. Hemantkumar Gopalbhai Shah vs. State Of Gujarat

Facts

The petitioner, Shree Sanwariya Impex, a proprietory firm registered under the GGST Act since April 9, 2019, received a show-cause notice dated November 10, 2021, from the Superintendent, Ghatak 23, Range 6, Division 2, Ahmedabad, Gujarat. The notice proposed cancellation of registration on the grounds of obtaining registration by fraud, wilful misstatement, or suppression of facts. The petitioner was directed to reply within seven working days and appear for a personal hearing on November 17, 2021. Subsequently, an order dated January 3, 2022, was passed by the same authority, cancelling the petitioner's registration effective from April 9, 2019, citing a spot verification report indicating no business unit and activity existed. The order determined zero tax, interest, penalty, and other amounts payable.

Held

The Court held that the show-cause notice dated 10.11.2021 and the impugned order dated 03.01.2022, cancelling the petitioner's GST registration, were vague. The Court found that the issue was covered by its previous decision in Aggarwal Dyeing and Printing Works vs. State of Gujarat & 2 Ors. In that case, the Court had emphasized the need for specific reasons and proper procedure when cancelling GST registrations. The reasoning was that vague notices do not provide the assessee with adequate opportunity to respond effectively, violating principles of natural justice. Consequently, the Court allowed the writ application, quashed and set aside the show-cause notice and the cancellation order, and directed the restoration of the petitioner's registration. The Court also noted that if the department wished to proceed further, it must do so strictly in accordance with the law and the observations made in the Aggarwal Dyeing and Printing Works case.

Key Issues

1. Whether the show-cause notice dated 10.11.2021 and the consequential order dated 03.01.2022, cancelling the GST registration of the petitioner, are liable to be quashed and set aside on grounds of vagueness and non-compliance with procedural requirements, as per Section 21A of the GGST Act and Rule 22 of the GGST Rules? The petitioner argued that both the show-cause notice and the impugned order were vague and lacked specific details, rendering them unsustainable. They relied on the High Court's decision in Aggarwal Dyeing and Printing Works vs. State of Gujarat & 2 Ors. (SCA No. 18860 of 2021, decided on 24.02.2022) which dealt with similar issues of vague notices and orders in GST registration cancellation cases. The revenue, represented by the learned AGP, did not record any specific arguments against the petitioner's contentions.