GST Registration Can’t Be Cancelled Without Providing Documentary Proof of Alleged ITC Fraud | Bombay HC

Case Details: Ashok Kumar Vishwakarma v. Union of India - [2023] 153 taxmann.com 481 (Bombay)

Judiciary and Counsel Details

• • G.S. Kulkarni & Jitendra Jain, JJ.
  • Nirmal Pagaria for the Petitioner.
  • Ms. Jaymala Ostwal and Siddharth Chandrashekher for the Respondent.

Facts of the Case

The department issued a show cause notice (SCN) for cancellation of registration of assessee. It was stated in column of reasons for proposing cancellation that there was wrong availment of ITC. It filed for adjournment of hearing which was not provided and the department proceeded to cancel registration by recording that assessee was heard and documents and reply submitted were examined.

It filed appeal against the cancellation order but the same was rejected by stating that there was short payment of tax and directions for cancellation were issued by anti-evasion wing. Therefore, it filed writ petition before the High Court.

High Court Held

The Honorable High Court noted that no documents were furnished to assessee in support of allegation made in SCN regarding wrong availment of ITC and it was mentioned in the impugned order that it was passed after hearing the assessee but no such hearing was provided. Moreover, the Appellate Authority proceeded to overlook such ground and in fact proceeded on a fresh material, namely, range officer’s report in regard to short paid tax and other materials in regard to cancellation of registration of suppliers of assessee though such materials were never supplied to assessee before rejecting assessee’s appeal.

Therefore, after considering settled principles of law and mandate of provisions of Section 29(2) which provides that proper officer shall not cancel registration without giving person an opportunity of being heard, the impugned order cancelling registration was liable to be set aside being in breach of principles of natural justice.