Paresh Textiles Prop Paresh Gudhka vs. Superintendent Range Iv Div V

Held

The Court held that the impugned order dated 06.08.2024 cancelling the GST registration retrospectively had travelled beyond the scope and contents of the Show Cause Notice dated 08.07.2024. The Show Cause Notice did not mention any intention to cancel the registration with retrospective effect. Furthermore, the Court noted that for the same period, a previously cancelled GST registration had been restored upon satisfaction with the Petitioner's explanation. The Court also took into account an Order-in-Original regarding penalty proceedings under Section 122, which observed that the Input Tax Credit availed by the Petitioner was genuine and that the Petitioner was not a fake supplier. Given these circumstances, and the fact that the Show Cause Notice did not provide for retrospective cancellation, the Court found it necessary to grant the Petitioner an opportunity to respond to the Show Cause Notice in the interest of justice. The impugned order was quashed and set aside, and the matter was remanded for fresh adjudication. The Petitioner was directed to appear before the Superintendent with a reply to the SCN. The GST registration of the Petitioner was revived.

Facts

The Petitioner, Paresh Textiles, sought to revoke the cancellation of its GST registration. The Superintendent issued a Show Cause Notice (SCN) dated 08.07.2024 for cancellation of registration, citing non-conduct of business at the registered premises. An order dated 06.08.2024 cancelled the registration retrospectively from 02.07.2017. The Petitioner's subsequent application for revocation was rejected due to unpaid tax dues, and an appeal to the appellate authority was also rejected. The Petitioner contended that the retrospective cancellation was not mentioned in the SCN and that a subsequent Order-in-Original concerning penalty under Section 122 of the CGST Act found the Petitioner not to be a fake firm. The Petitioner attributed the non-presence at the registered premises to financial losses and bank proceedings due to COVID-19.

Key Issues

1. Whether the impugned order of cancellation of GST registration dated 06.08.2024 travelled beyond the scope and contents of the Show Cause Notice dated 08.07.2024, specifically concerning the retrospective effect of cancellation, as per principles of natural justice? 2. Whether the Petitioner was afforded a proper opportunity to be heard and present their case, considering the circumstances leading to the cancellation and subsequent rejection of revocation and appeal? Petitioner's Arguments: The Petitioner argued that the retrospective cancellation of GST registration was not indicated in the Show Cause Notice, making the impugned order ultra vires the SCN. They relied on the finding in a subsequent Order-in-Original (dated 04.02.2025) which held that the Petitioner was not a fake firm and that proceedings under Section 122 were wrong. The Petitioner also cited financial difficulties due to COVID-19 and bank proceedings as reasons for not being present at the registered premises. Respondents' Arguments: The Respondents contended that the Petitioner failed to avail the opportunity to file a reply to the Show Cause Notice. They asserted that the Petitioner was not conducting business from the registered place and that the cancellation with retrospective effect was justified. They referred to the Show Cause Notice dated 29.07.2024 (though the judgment mentions 08.07.2024 for cancellation and 29.07.2024 for penalty proceedings) and argued that the order complied with the principles of natural justice.