M/S Om. Trading Company vs. Deputy Commissioner Of State Tax Gwalior

Held

The High Court held that the cancellation of the appellant's GST registration was justified. The Court found that a detailed inquiry was conducted by the Commercial Department, which revealed discrepancies regarding the appellant's business. Specifically, it was found that the appellant failed to prove e-way bill transaction details and that goods were not physically transported from Agra to Gwalior. The Court noted that the appellant was afforded a proper opportunity of hearing before the cancellation order was passed. The Court distinguished the judgments relied upon by the appellant, stating that the facts of those cases were different from the present one, where the inquiry established a lack of physical transfer of goods. Therefore, no fault was found with the findings of the learned Single Judge or the Appellate Authority, and the writ appeal was dismissed.

Facts

M/s Om Trading Company (appellant) challenged the cancellation of its GST registration. The Deputy Commissioner of State Tax issued a show cause notice alleging that the appellant was conducting business only on paper, with e-way bills downloaded but no actual goods transported. This was based on a report from Agra indicating the appellant purchased clarified butter from M/s Macro International, Agra, via two bills totaling Rs. 6,399,000/- on 31.07.2018. The notice was issued under Rule 21(b) of the CGST Rules, 2017, for issuing invoices without supply of goods. The appellant's registration was cancelled on 09.01.2019. An appeal to the Appellate Authority and a subsequent writ petition before the High Court were dismissed, affirming the cancellation. The present Writ Appeal challenges the High Court's dismissal order.

Key Issues

1. Whether the cancellation of the appellant's GST registration under Rule 21(b) of the CGST Rules, 2017, was justified, considering the appellant's contention that goods were physically transported from Agra to Gwalior via specific vehicle numbers and a stated route, supported by e-way bills and invoices. 2. Whether the authorities erred in disregarding the appellant's evidence of physical transportation and toll plaza records, leading to an erroneous finding that invoices were issued without supply of goods. The appellant argued that the impugned order was perverse and contrary to law, that the appellate authority's order was silent on the provisions under which it was passed and lacked reasoning, and that the physical transportation was supported by documents and vehicle movement. They relied on Kerala High Court judgments in Kannangayathu Metals and Relcon Foundations (P) Ltd. regarding detention of goods under Section 129 without valid e-way bills. The respondents contended that the appellant failed to produce material evidence of physical transfer, that toll plaza receipts were absent for the route taken, and that the route chosen was longer and less efficient than alternatives. They also stated that cancellation followed due opportunity of hearing.