M/S Mahavir Traders vs. Union Of INDIA

Held

The Court held that the show cause notice dated July 21, 2020, was unsustainable in law due to its extreme vagueness. The notice failed to provide specific facts or details, rendering it impossible for the petitioner to formulate a proper response. Consequently, the principles of natural justice were violated. The Court also found that the cancellation order dated July 31, 2020, could not be sustained as it stemmed from the invalid show cause notice. The Court noted that the petitioner's claim of not having submitted a reply or been afforded a hearing was not disputed by the respondent. Therefore, the Court quashed both the show cause notice and the cancellation order. The Court did not grant liberty to proceed afresh but observed that the respondent might proceed in accordance with law if permitted.

Facts

The petitioner, M/s Mahavir Traders, filed a writ petition challenging a show cause notice dated July 21, 2020, and an order dated July 31, 2020, which cancelled its GST registration. The show cause notice, issued by Superintendent Prem Raj Meena, cited 'fraud, willful misstatement or suppression of facts' as the reason for potential cancellation. The petitioner argued that the show cause notice was vague and did not provide sufficient details for a response. Furthermore, the petitioner contended that no reply was filed by them, nor was any opportunity for a personal hearing afforded before the cancellation order was passed, despite the order referencing a reply and a hearing. The respondent acknowledged a technical glitch in the system.

Key Issues

1. Whether the show cause notice dated July 21, 2020, issued under Rule 22(1) of the CGST Rules, 2017, is sustainable in law due to its vagueness and lack of specific details, thereby violating the principles of natural justice? 2. Whether the order dated July 31, 2020, cancelling the GST registration of the petitioner is valid, given the petitioner's contention that no reply was filed and no personal hearing was provided, contrary to the order's recitals? Petitioner's arguments: The petitioner argued that the show cause notice was excessively vague, making it impossible for the assessee to provide a meaningful reply. They further contended that the cancellation order was passed without affording them an opportunity to file a reply or attend a personal hearing, despite the order suggesting otherwise. This, they argued, violated principles of natural justice. Revenue's arguments: The respondent's counsel attempted to explain the discrepancy by attributing it to a technical glitch in the online portal. They submitted a reply on record.