Reetu | Mar 14, 2022 |
GST Department cannot cancel a GST registration just by saying that the firm is “Bogus”
The Allahabad High Court in the matter of Apparent Marketing Private Limited Vs. State Of U.P. ruled out that GST Department cannot cancel a GST registration just by mentioning the firm “Bogus”.
The assessee applied for and was granted registration under the UP GST Act, 2017 (hereinafter referred to as the ‘Act’) w.e.f. 17.08.2017 for trading in Pan Masala and Tobacco. The assessee claims to have filed its return on time and it also claims to have deposited the due tax.
The Coram found out that, “A survey was conducted at the assessee’s business premises on 15.12.2017. Those premises were found closed. Another survey was conducted at the assessee’s business premises on 16.02.2018. However, no adverse material is claimed to have been discovered during that survey proceedings. Besides the above two survey, the assessee claims to have cooperated in certain proceedings against a third party where under it had been summoned under Section 70 of the Act.”
The Assessee received a notice through e-portal of the revenue department on 22.07.2020 issued under Section 29 of the Act whereby the registration granted to the assessee under the Act was proposed to be cancelled for the following solitary reason: “Your firm was found bogus in inspection of SIB. Information received from headquarter.”
The cancellation of registration can arise only in the event of existence of any of the five statutory conditions enumerated under Section 29(2) of the Act. Firm being “bogus” is not one of the conditions on which such notice may arise. In face of statutory returns having been filed and tax having been regularly paid, the revenue authorities could not have cancelled the registration of the assessee by describing it as “bogus” without specifying the exact nature of charge and without confronting the assessee with the exact material in support of such charge.
The High Court Rule out that, “Merely describing the assessee firm “bogus”, the respondent authority did not make known to the assessee the exact charge that was being levelled against the assessee. Correspondingly, the respondent authority deprived the assessee of the necessary opportunity to rebut the charge.”
The charge levelled in the notice dated 22.07.2020 and as was reiterated in the order dated 13.08.2020 and the further notice dated 21.08.2020 are wholly, vague. Effectively, it prevented the assessee to rebut the same. The statute contemplates issuance of the notice in specified circumstances for specific grounds. Those could not be diluted or muddled or made vague by describing the assessee firm as “bogus”. In absence of any specific charge, the respondent authority could not be permitted to proceed to cancel the assessee’s registration. Though it may remain open to the Assessing Authority to issue a fresh notice with exact charge specification, the proceedings arising from the impugned notice is inherently defective.
Remarkably, despite reply having been furnished by the assessee, the order dated 21.08.2020 is as vague and defective as the initial notice inasmuch as, only reason given in that order is that the assessee firm is “bogus”. No discussion has been made of the reply furnished by the assessee and no reason has been given why the ex-parte order dated 13.08.2020 has not been recalled.
The Judgment was made by Hon’ble Justice Saumitra Dayal Singh.
The Petitioner was represented by Praveen Kumar and the Respondent was represented by C.S.C.
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