Case Title | M/S D.M. Traders vs Union Of India And Another |
Court | Allahabad High Court |
Judges | Justice Sunita Agarwal Justice Vipin Chandra Dixit |
Citation | 2022 (10) GSTPanacea 461 HC Allahabad WRIT TAX No. – 1342 of 2022 |
Judgment Date | 21-October-2022 |
Petitioner challenged the Show Cause Notice issued for Suspension of GST Registration before High Court.
Petitioner’s pleaded that the SCN lack in all material details so as to enable the Petitioner to submit proper reply to the same.
High Court held that challenge to SCN for Cancellation of Registration is not entertainable in a Writ Petition when the Petitioner has not even submitted any reply to the Notice.
Friends in case of Brindavan Beverages P. Ltd (2007) Honourable Supreme Court has held that a Show Cause Notice cannot be sustained in the eye of law if Petitioner is not able to reply the same in absence of any reason or material deficiency in it.
SCN must comprise of four things:
Foundation of Facts Material to reach such foundation of FACTS Allegations/Violation of Law in light of the foundational FACTS Showing Cause against such allegations and the consequence thereof.
I would respectfully defer with the view of court in this case because if one has to reply to every SCN then no one will CHALLENGE the SCN even if it is materially deficient. Any contrary view is welcomed for discussion.
The petitioner, represented by learned counsel Sri Krishna Agarwal, is challenging a show cause notice dated 18.08.2022, which calls for an explanation regarding the initiation of proceedings for the cancellation of registration under the CGST Act. The notice states that the petitioner’s registration has been suspended since the mentioned date.
The petitioner argues that the show cause notice lacks essential details and reasons for initiating the cancellation proceedings, making it impossible for them to provide a proper reply. Citing the decision of the Apex Court in Commissioner of Central Excise, Bangalore vs. Brindavan Beverages (P.) Ltd., it is contended that such a notice is legally unsustainable without disclosing foundational facts, material evidence, allegations, and the opportunity to show cause against those allegations.
The respondent’s counsel, Sri Krishna Agarwal, draws attention to an order initiating proceedings under Section 129(1)(b) of the CGST Act, resulting in penalties imposed on the petitioner. It is asserted that the challenged show cause notice is a consequence of the earlier proceedings.
The show cause notice specifies reasons for the action, including the issuance of invoices without the supply of goods or services, violating the Act and rules, leading to wrongful utilization of input tax credit refund.
The petitioner had appealed against the order under Section 129(1) of the CGST Act, contesting the penalty before the First Appellate Authority.
Considering these facts, the court finds that the suspension of GST registration is a result of ongoing proceedings for violation of the GST Act, specifically related to issuing invoices without supplying goods and wrongful utilization of benefits.
The court concludes that the petitioner should provide a proper reply to the show cause notice, making a case for why action should not be taken. Since the petitioner approached the court without responding to the notice, the court declines to interfere at this stage.
However, the court leaves the door open for the petitioner. If they submit a reply along with a certified copy of the court’s order within two weeks, the competent authority will consider and decide the matter in accordance with the law.
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