M/S S.K. Enterprises vs. The Commissioner

Held

The Court held that while the respondent authorities were correct in pointing out that Rule 22 of the CGST Rules prescribes a seven-day period for replying to a show cause notice, the petitioner cannot be faulted for adhering to the 30-day period explicitly granted in the show cause notice itself. The Court found that the cancellation order dated 10/04/2023 was erroneous because it stated that the petitioner had not filed a response, when in fact a reply had been submitted on 02/04/2023. Consequently, the Court set aside the cancellation order and granted the petitioner liberty to file their GST returns as per law. The Court did not explicitly address the validity of the cancellation based on the discrepancy in the reply period, but rather focused on the failure to consider the filed reply.

Facts

The petitioner, M/s S.K. Enterprises, filed a writ petition challenging the cancellation of its GST registration by the respondent authorities. The cancellation order dated 10/04/2023 was issued after the petitioner failed to respond to a show cause notice dated 02/03/2023. The petitioner had filed a reply to this notice on 02/04/2023. The respondent authorities contended that the show cause notice incorrectly mentioned a 30-day period for reply, whereas Rule 22 of the CGST Rules mandates a seven-day period. The petitioner argued that they acted in accordance with the time granted in the show cause notice.

Key Issues

1. Whether the cancellation of GST registration is valid when the petitioner filed a reply within the time granted by the show cause notice, despite that period being longer than prescribed by Rule 22 of the CGST Rules? Petitioner's arguments: The petitioner contended that they were not at fault as they filed their reply within the 30-day period specified in the show cause notice issued by the respondent. They argued that the respondent's own notice created the expectation of a 30-day response window, and their subsequent failure to consider the reply was erroneous. Revenue's arguments: The respondent authorities argued that the show cause notice dated 03/03/2023 wrongly mentioned 30 days for filing a reply, as Rule 22 of the CGST Rules stipulates a seven-day period for response. They implied that the petitioner should have adhered to the statutory rule rather than the incorrect period mentioned in the notice.