GST Update

 Desk of CA. Praveen Sharma – 1025 Series (CAPS) 

PUNJAB AND HARYANA HIGH COURT   IN THE CASE OF Mahavir Metal Company

The petitioner challenged the retrospective cancellation of GST registration on the ground that the cancellation order was passed without issuance of any proper show cause notice proposing retrospective cancellation.

The Court observed that although the law permits retrospective cancellation of registration, such action can only be taken after specifically informing the taxpayer about the proposed retrospective effect and the reasons supporting such action.

It was further held that principles of natural justice require the authority to clearly disclose the grounds and material relied upon before passing any adverse order. A show cause notice must contain the basis on which action is proposed so that the assessee gets an effective opportunity to respond.

The Court relied upon the settled principle that a quasi-judicial authority must act fairly and with an open mind while initiating proceedings. Absence of a proper notice proposing retrospective cancellation vitiates the entire proceedings.

Since the department could not dispute that no such specific notice was issued to the petitioner, the Court held that the retrospective cancellation order could not be sustained in law.

Accordingly, the impugned order cancelling the GST registration retrospectively was set aside with liberty to the department to proceed afresh in accordance with law after following due process.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS