In Writ Petition No.16097 of 2023 -AP HC- Andhra Pradesh High Court orders immediate restoration of GST registration for M/s. Arhaan Ferrous and Non-Ferrous Solutions Pvt. Ltd.; urges Authorities to exercise diligence in issuing show-cause notices to prevent hardship for assessees
Justice U. Durga Prasad Rao & Justice Venkata Jyothirmai Pratapa [12-07-2023]

Read Order: M/s. Arhaan Ferrous and Non - Ferrous Solutions Pvt. Ltd. V. The Superintendent and Ors

Chahat Varma

New Delhi, August 1, 2023: The Andhra Pradesh High Court has ruled in favour of M/s. Arhaan Ferrous and Non - Ferrous Solutions Pvt. Ltd. (petitioner), directing immediate restoration of the petitioner's GST registration. The Court held that the show-cause notice issued to the petitioner lacked clarity, as it did not specify the grounds for cancellation and it failed to mention the particulars of the issuing authority. Due to these defects, the Court struck down the notice at the threshold.

In this writ petition, the petitioner had challenged the proceedings issued under Rules 22(1) and Sub-Rule (2A) of the Goods and Services Act (GST Act), which sought a show-cause explanation for the cancellation of the petitioner's GSTIN registration. The petitioner's main grievance was that the show-cause notice was unclear, ambiguous, and lacked specific grounds for cancellation, depriving the petitioner of the opportunity to provide a proper objection or explanation. Additionally, the notice did not mention the particulars of the issuing authority, making it difficult for the petitioner to ascertain whether it was issued by the Central Authority under the CGST Act or the State Authority under the Andhra Pradesh Goods and Services Act. Upon verification, the petitioner discovered that the impugned show-cause notice was issued by the Assistant Commissioner (Central Taxes), Chittoor-1 Range, Tirupati Division, and therefore, the petitioner addressed their explanation to this authority.

During the hearing, the Senior Standing counsel for CBIC representing the respondents stated, that the impugned show-cause notice had not been issued by the office of the Assistant Deputy Commissioner (Central Taxes), Tirupati Division, or any other Central Authority. The counsel requested the Court to take appropriate action in light of this information.

The bench comprising of Justice U. Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa acknowledged the arguments presented by the petitioner, agreeing that the show-cause notice lacked clarity and was cryptic, making it difficult to discern the specific default committed by the petitioner. Furthermore, the notice did not include crucial particulars, such as the designation and office of the issuing authority. The bench opined that these deficiencies in the show-cause notice were significant enough to warrant its rejection at the outset.

The bench further expressed its concern that this was not the first occasion where these types of show-cause notices were being issued by the concerned authorities without clearly mentioning the reason for issuing such notice and without mentioning the particulars of issuing authority. The bench asserted that they hope and trust that the concerned authorities would exercise diligence in the future while issuing show-cause notices. They pointed out that such notices carry significant consequences, such as drastic orders of suspension of registration for the concerned assesses, leading to considerable hardship for them.