Infinity Infomatic Private Limited Vs Commissioner, Central Tax
Date: October 9, 2023
Subject Matter
Registration cancellation: SCN cannot be bereft of any particulars, and the consequent order cannot be unreasoned.
Summary
The case relates to a petitioner who has filed a petition challenging an order where their GST registration was cancelled with retrospective effect. The petitioner had received a Show Cause Notice proposing the cancellation of their GST registration due to the issuance of invoices without the supply of goods and/or services, which led to wrongful availment or utilization of input tax credit or refund of tax. The petitioner claims to have closed down their business, failed to respond to the notice, and had their registration suspended. The impugned order cancels the GST registration with retrospective effect from July 1, 2017. The petitioner argues that the cancellation should only take effect from April 2021, when they closed their business, and that the notice and order lack sufficient particulars and reasoning. The court sets aside the order to the extent it cancels the registration retrospectively, directing that it should take effect from April 2021. However, the respondents are not precluded from taking further action for the recovery of any tax, penalty, or interest that may be due.
1. The petitioner has filed the present petition impugning an order dated 09.08.2021 (hereafter ‘impugned order’), whereby the petitioner’s GST registration was cancelled with retrospective effect.
2. The petitioner was issued a Show Cause Notice (hereafter ‘SCN’) dated 09.07.2021, proposing to cancel the petitioner’s GST registration, for the following reason:
“1. Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”
3. The petitioner was called upon to respond to the said SCN within a period of seven working days, and to appear before the concerned officer on the pointed date and time. However, no date or time was mentioned in the SCN. Additionally, the petitioner’s GST registration was suspended from the same date; that is from 09.07.2021.
4. The petitioner claims that he had closed down the business and omitted filing any response to the said SCN.
5. The petitioner’s GST registration was cancelled by the impugned order with retrospective effect from 01.07.2017. The impugned order also includes a Tabular Statement which indicates that no amount had been ascertained as payable by the petitioner.
6. It is the petitioner’s case that he had closed down the business during April, 2021 (while the pandemic was raging).
7. It is stated that the Director of the petitioner Company had also instructed the Accountant to inform the GST Authorities regarding closure of the business. However, the said information was not submitted. It is stated that the petitioner was carrying on business from 01.04.2015 till March, 2021. However, one of the Directors and the promoter of the petitioner company has since expired and, therefore, the business was closed down.
8. Although, the petitioner has no grievance regarding cancellation of his GST registration, the petitioner is aggrieved to the limited extent that the cancellation is with retrospective effect. It is alleged in the SCN that the petitioner had issued invoices without supply of goods which had resulted in wrongful availment of Input Tax Credit (ITC) / refund of tax. However, no particulars as to the offending invoices were mentioned. The SCN also did not mention the quantum of wrongful availment of ITC or any refund claimed on the said account.
9. It is also seen that the impugned order cancelling the petitioner’s GST registration does not mention any reason for cancellation of GST registration, except that no reply to the SCN had been submitted.
10. There is merit in the contention that the SCN is bereft of any particulars, and that the impugned order is unreasoned.
11. In view of the above, the SCN as well as the impugned order is liable to be set aside to the extent it cancels petitioner’s GST registration retrospectively. Since it is stated that the petitioner has closed down the business with effect from March, 2021, we direct that the impugned order cancelling the petitioner’s GST registration shall take effect from April, 2021. This is also for the reason that the SCN did not mention that the petitioner’s GST registration would be cancelled with retrospective effect. Thus, the petitioner had no opportunity to object to the same.
12. Having stated the above, we clarify that in the event, the respondents propose to take any action for cancellation of petitioner’s GST registration with retrospective effect, it would be open for the respondents to do so, albeit, in accordance with the law – the respondents would require to issue a proper SCN and take an appropriate decision after affording the petitioner a reasonable opportunity to be heard.
13. The respondents are also not precluded from taking any steps for the recovery of any tax, penalty or interest that may be due from the petitioner.
14. The petition is disposed of in the aforesaid terms.