High Court reversed arbitrary cancellation order of GST  registration which was done by state government without relying upon any report or any inquiry

Facts:

• Petitioner received a Show Cause Notice (SCN) issued by authorities for cancellation of registration on the ground that petitioner is not functioning/non-existing at the principal place of business.
• The authorities have passed an order of cancellation of registration after noting no reply to SCN from the petitioner.
• The petitioner got to know that its registration has been cancelled during the generation of e-way bill (i.e. no communication for cancellation of registration was received by the petitioner).
• Petitioner applied for the revocation of cancellation of registration along with the extension of time to submit its reply to SCN. The officer rejected the application for revocation without considering the petitioner’s request.

Points Considered for Judgment:

• On filing the petition before the Hon’ble Allahabad High Court, it was noticed that authorities have not relied upon any report or any inquiry conducted to form the opinion and on what basis was the allegation levelled that the tax payer was not functioning.
• The rejection order does not indicate as to when the inspection was carried. The High Court stated that the authorities’ actions are clearly not in consonance with the ease of doing business, which is being promoted at all levels.

Judgement:

In view of the above, the High Court of Allahabad has quashed the order passed by authorities and it further imposed a cost of Rs.50,000/- on the state government for harassing the petitioner.

SW Opinion:

Clearly a vague SCN without any allegation or proposed evidence against the tax payer, is violation of principles of administrative justice.

Hrithik Sachdeva, Audit Associate, SW India