REGISTRATION MAY NOT BE CANCELLED ON THE WHIMS AND FANCIES OF THE PROPER OFFICER. EXACT REASONS MUST BE DISCLOSED-HIGH COURT

What would you do if you have been served with a notice of canceling the GST registration without even letting you know the reasons for canceling it? Sec 29(2) of the CGST Act lays down the reasons for which a GST registration is subject to cancellation which includes the following

• Contravention of any provisions of the Act or rules,
• Composite dealer has not furnished returns for the three tax periods consecutively,
• Other dealers have not furnished returns for a continuous period of 6 months,
• Business is not commenced within 6 months of the grant of voluntary registration,
• Registration obtained by means of fraud, willful misstatement, or suppression of facts.

The first bullet says, “Contravention of any provisions of the Act or rules”. This itself could not be the ground in our view. A ground is something that should be specific. It is important to mention in the notice for cancellation, that exactly which provision of law or the rules has been contravened. Merely quoting that something is contravened is vague and invalid.

A similar view was taken by the Honorable High Court of Allahabad in a writ. The HC quashed the order canceling registration which was passed based on a SCN that was silent on the exact contravention of the provisions of the Act or the rules.

Source: M/S Ram Krishna Garg Supplier Vs. State of U.P. and 4 others. WRIT TAX NO. 1064 OF 2021

Ridham Chopra, Executive- Indirect Tax, SW India