Mayel Steels Pvt Ltd Vs Union of India
Date: June 18, 2023
Subject Matter
SCN proposing registration cancellation must be forwarded to the dealers by e-mail and/or by hand delivery
Summary
This is a case where the Respondent, a Superintendent, acted arbitrarily in canceling the CGST registration of the Petitioner. The show cause notice was issued with very short notice and at a peculiar time. The Petitioner submitted a reply to the show cause notice, but in the meantime, the Joint Commissioner issued orders for provisional attachment of the Petitioner's bank account/property. The Petitioner approached the court, arguing that the actions of the Respondent were arbitrary and violated the principles of natural justice. Despite being aware of the petition, Respondent No.2 proceeded to cancel the Petitioner's registration. The court ultimately set aside both the show cause notice and the order to cancel registration, and emphasized the importance of providing opportunity to be heard and issuing show cause notices effectively.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
We have heard learned Counsel for the parties. This is a classic case where Respondent No.2-Superintendent, Range IV, Division II, CGST & C EX, has acted in an arbitrary manner in cancelling the CGST registration of the Petitioner. A show cause notice was issued to the Petitioner on 1st August 2022 peculiarly calling upon the Petitioner to remain present on 2nd August 2022 at 2.01 p.m. Such show cause notice was merely uploaded on the WebPortal. We fail to understand as to how such short notice could be issued to the Petitioner, calling upon the Petitioner to remain present on the next date and, that too, at a very peculiar time at about 2.01 p.m. Be that as it may, in circumstances things stood, after the Petitioner became aware of the show cause notice, the Petitioner submitted a reply to the show cause notice dated 8th August 2022, which was received by the said authority on 9th August 2022. In the meantime, it appears that the Joint Commissioner of State Tax (GST) issued orders under FORM GST DRC-22 for Provisional Attachment of Bank Account/Property under Section 83 of the CGST/SGST Act, 2017.
2. On the above backdrop, on 24th November 2022, the Petitioner approached this Court by filing the present petition, making a grievance that such action being resorted by Respondent No.2 was patently arbitrary. The Petitioner has contended that the adjudication of the show cause notice overlooks the basic principles of natural justice as is passing an order adverse to the Petitioner inflicting the Petitioner with civil consequences the Petitioner was never granted an opportunity of being heard.
3. It appears that despite Respondent No.2 being put to notice of the filing of this petition, which was served on 2nd December 2022, Respondent No.2 proceeded to pass an order dated 2nd January 2023, cancelling the Petitioner’s registration. It also appears that the impugned order takes within its ambit some issues, which are not part of the show cause notice.
4. In the above circumstances, there is no reason to not accept the Petitioner’s case that Respondent No.2 acted in an arbitrary manner in exercising powers vested in him when he passed the impugned order in breach of the principles of natural justice. In these circumstances, there can be no alternative but to set aside not only the show cause notice but the impugned order dated 2nd January 2023 cancelling the Petitioner’s registration. Ordered accordingly.
5. We may also clarify that Respondent No.2 is free to issue fresh show cause notice. If that be so, an opportunity be given to the Petitioner to reply to the fresh show cause notice in accordance with law.
6. We may also observe that whenever an action is intended to be taken by the Respondent in respect of registration of the dealers, it is expected that the show cause notice in that regard is not merely uploaded on the Web-portal but also a copy of the same be forwarded to the dealers by e-mail and/or by hand delivery, so that the same are effectively replied.
7. Disposed of in the above terms. No costs.