InWP(C) No. 25716 of 2023 -KER HC- Kerala High Court sets aside GST registration cancellation order, directs petitioner to appear before Superintendent of Central Tax & Central Excise
Justice Dinesh Kumar Singh [13-09-2023]

Read Order:Muhammad Salmanul Faris K V. The Superintendent

Chahat Varma

New Delhi, September 26, 2023: The Kerala High Court has set aside an order cancelling the GST registration of a petitioner, holding that the competent authority had taken an independent decision without following the due process of law.

The petitioner had filed the present writ petition, challenging an order, that cancelled their GST registration. The cancellation was primarily based on allegations that the petitioner had issued invoices and bills to other dealers without actually supplying goods or providing services, which was deemed a violation of the Goods and Services Tax Act (GST Act) and Rules.

In the said case, a communication was sent to the petitioner, referring to the investigation initiated by DGGI, Kochi Zonal Unit into a fake invoicing cartel. This communication indicated that the petitioner was allegedly involved in fraudulently availing fake input tax credit from multiple firms. Consequently, the Deputy Director of DGGI, Kochi Zonal Unit had requested the Range Officer in Ottapalam to cancel the petitioner's GST registration. After the notices and opportunities for personal hearings, the GST registration was ultimately cancelled.

The petitioner's counsel argued that the cancellation order was issued without following the due process of law and was against the provisions of the GST Act and Rules.

On the other hand, the department's counsel argued that the cancellation was based on evidence of a large cartel engaged in fraudulent input tax credit claims. They claimed that the petitioner had the opportunity to present evidence and dispute the allegations during the personal hearing but failed to do so.

The bench of Justice Dinesh Kumar Singh found that there was no dispute over the fact that the DGGI, Kochi Zonal Unit had already made a decision to cancel the petitioner's GST registration. Therefore, the bench was of the opinion that the competent authority was only expected to follow the formal procedures, and they should not have made an independent decision.

With the above observations, the Court decided to set aside the impugned cancellation order and directed the petitioner to appear before the Superintendent of Central Tax & Central Excise, on September 18, 2023. The petitioner was required to bring relevant records to dispute the allegations contained in the show cause notice. The court held if the show cause is cancelled, the petitioner would be entitled for restoration of the GST registration certificate. However, if the authority takes a decision to cancel the GST registration of the petitioner, he may take recourse to appropriate proceedings as available under law.

The court provided a clarification that the Superintendent of Central Tax should make an independent decision without being influenced by the direction of the DGGI, Kochi Zonal Unit.