M/S L.K. Enterprises vs. Union Of INDIA

Held

The High Court quashed the impugned order dated 14.10.2021, which cancelled the petitioner's GST registration. The Court found that the order was passed with a procedural irregularity, as it incorrectly noted the submission of a reply to the show cause notice by the petitioner, when the petitioner contended no such reply was filed. The Court reasoned that this discrepancy warranted a fresh consideration of the matter. Consequently, the matter was remitted back to the authority for a decision afresh. The petitioner was granted 15 days to file a reply to the show cause notice, which was declared as the first and last opportunity. If the petitioner fails to file the reply within this period, the final order of cancellation shall stand revived. The ratio decidendi is that an order passed based on a factual misstatement regarding the submission of a reply to a show cause notice is procedurally flawed and liable to be set aside.

Facts

The petitioner, M/s L.K. Enterprises, filed a writ petition challenging an order dated 14.10.2021, which cancelled its GST registration. The cancellation was purportedly due to non-filing of returns for six months. A show cause notice dated 13.08.2021 was issued to the petitioner. The petitioner claims it did not submit a reply to this notice, yet the final order stated a reply was received. The High Court issued notice to the respondents to explain their actions in deciding the show cause notice despite the alleged lack of reply from the petitioner.

Key Issues

1. Whether the GST registration cancellation order dated 14.10.2021 is vitiated by procedural irregularity, specifically concerning the consideration of the petitioner's reply to the show cause notice, as contemplated under Section 29(2) of the CGST Act, 2017 and Rule 21 of the CGST Rules, 2017? Petitioner's contention: The petitioner argued that the impugned order incorrectly stated that a reply to the show cause notice was submitted, when in fact, no reply was filed. This misrepresentation renders the order unsustainable. Revenue's contention: The judgment does not record any specific arguments made by the revenue or state. However, the court's direction implies a need for the revenue to justify its actions in issuing the final order.