M/S Jay Laxmi Industries Through Its Proprietor Jigneshbhai Jashwant Lal Raval vs. Union Of INDIA Through Office Of The Commissioner CGST And Central Excise

Held

The High Court dismissed the writ petition, holding that the petitioner had an efficacious alternative remedy of appeal under Section 107 of the CGST Act against the order of cancellation of registration. The Court noted that the petitioner challenged the show cause notice and the cancellation order on merits but failed to provide documentary evidence to disprove the allegations. The petitioner's explanation for not filing a reply (inability to open the portal) was not considered a justification. The Court also observed that the petitioner had not disclosed the action taken regarding a similar cancellation of registration in Maharashtra. Citing the Supreme Court judgment in State of Maharashtra & Others v/s Greatship (India) Limited, the Court held that entertaining a writ petition under Article 226 of the Constitution, bypassing the statutory remedy of appeal, is an error. The petitioner was granted liberty to file an appeal against the order of cancellation of registration. The Court did not express any opinion on the merits of the case.

Facts

The petitioner, M/s Jay Laxmi Industries, challenged a show cause notice dated 13.09.2024 and the subsequent cancellation of its GST registration dated 01.10.2024. The petitioner, engaged in the business of pesticides and related products, had GST registration since 01.07.2017 and claimed to have filed returns until July 2024. The respondent issued the show cause notice invoking Section 29(2)(e) of the CGST Act, 2017, read with Rule 21(a) and (b) of the CGST Rules, 2017, proposing cancellation of registration. The petitioner failed to submit a reply, citing inability to access the common portal. The respondent then passed an order cancelling the registration retrospectively from 01.07.2017, citing fraud, willful misstatement, suppression of facts, non-conduct of business from the declared place, and issuance of invoices without supply. The petitioner filed a writ petition instead of an appeal, arguing procedural irregularities, lack of personal hearing, and retrospective cancellation.

Key Issues

1. Whether the writ petition is maintainable under Article 226 of the Constitution of India, despite the availability of an alternative statutory remedy of appeal under Section 107 of the GST Act, when the petitioner has challenged the show cause notice and the order of cancellation of registration on merits? 2. Whether the cancellation of GST registration with retrospective effect is legally permissible and valid? Petitioner's arguments: The petitioner contended that the procedure under Rule 25 of the CGST Rules, 2017, was not followed, as a specific date and time for appearance were not provided in the show cause notice, invalidating the proceedings. They also argued that the show cause notice was not in the prescribed form (GST REG-17) and that no opportunity for a personal hearing was granted before the cancellation order. Reliance was placed on various High Court judgments that set aside GST registration cancellations due to non-grant of personal hearing and retrospective cancellation. The petitioner also argued that there is no absolute bar to entertaining a writ petition when efficacious remedies are available, citing Apex Court and Bombay High Court judgments. Respondents' arguments: The respondents argued that the writ petition is not maintainable as a statutory remedy of appeal under Section 107 of the GST Act is available. They stated that the cancellation proceedings arose from data received from the Directorate General of Analytics and Risk Management, indicating non-genuine business activities. They also pointed out that the proprietor of the petitioner firm had faced similar proceedings in Maharashtra, leading to cancellation of registration there. The respondents further argued that the petitioner failed to submit a reply and did not avail the remedy of appeal within the prescribed time.