GST Update

Desk of CA. Praveen Sharma – 951 Series (CAPS) 

Sikkim High Court in the case of A2Z Infra Engineering Ltd.

The Sikkim High Court recently dealt with a case involving cancellation of GST registration of M/s A2Z Infra Engineering Ltd. The petitioner was registered under the CGST Act, 2017. However, the GST authorities cancelled its registration through an order dated 30 October 2023.

The cancellation was based on a show-cause notice dated 26 September 2023. The notice alleged that during inspection the business entity was found non-existent at the declared place of business and no business activity was being carried out at the said location.

In response, the petitioner submitted a reply through email. The company explained that it follows a centralized accounting system and does not keep accounts-related staff in the Sikkim office. It also stated that due to a cloud burst in Sikkim, employees were unable to travel to the state during that period.

The petitioner requested an extension of 20 days to submit a detailed response and also asked for a personal hearing before any adverse action was taken. However, the GST authorities passed the order cancelling the registration without discussing the explanation provided by the petitioner.

The Court noted that the cancellation order did not provide any reasons and did not refer to the reply submitted by the petitioner or the request for extension and personal hearing. Because of this, the Court held that the order was not sustainable in law.

During the hearing, the petitioner also placed documents before the Court to show that business activities were actually being carried out. It was also informed that the company had already obtained a fresh GST registration.

Considering these facts, the High Court directed the authorities to reconsider the matter after giving proper opportunity of hearing to the petitioner. The Court also stated that if the petitioner files an application for cancellation of the earlier registration due to the new registration, the same should be taken into account while deciding the matter again.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS