In WRIT TAX No. 397 of 2023 – ALL HC - Merely calling a registered firm 'bogus' does not justify cancellation of GST registration, says Allahabad High Court
Justice Piyush Agrawal [19-05-2023]


Read Order: M/s Star Metal Company vs. Additional Commissioner and Ors.


Chahat Varma


New Delhi, June 1, 2023: The Allahabad High Court has ruled that the cancellation of a GST registration that has been granted, requires the respondent authority to bear a substantial burden of proof proving the existence of facts that warrant such cancellation. According to Section 29(2) of the Goods and Services Act, a registration can only be cancelled if one of the five specified statutory conditions are met. Merely describing the registered firm as ‘bogus’ does not justify the cancellation of the registration.


The present writ petition was filed challenging the order dated 01.12.2020 passed by the respondent no. 2 cancelling the GST registration of the petitioner, order dated 19.03.2021 passed by the respondent no. 2 rejecting the petitioner's revocation application for cancellation of the registration as well as the order dated 14.10.2022 passed by the respondent no. 1 confirming the rejection of the revocation application of the petitioner.


The court observed that admittedly, the registration of the petitioner was cancelled on the basis of the survey with the report that the disclosed business place of the firm was not found and therefore, the firm was bogus.


The court placed reliance on Apparent Marketing Private Limited v. State of U.P. and Others [LQ/AllHC/2022/8401], wherein it was held that, “cancellation of registration has serious consequences. It takes away the fundamental right of a citizen etc. to engage in a lawful business activity……Though the notice for cancellation of registration may not be placed on a high pedestal of a jurisdictional notice, at the same time, unless the essential ingredients necessary for issuance of such notice had been specified therein at the initial stage itself, the authorities cannot be permitted to have margin or option to specify and/or improve the charge later.”


Consequently, the court quashed the orders dated 01.12.2020, 19.03.2021 and 14.10.2022.


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