Optimum Viking Satcom India Pvt Ltd vs Principal Commissioner

The petitioner impugns an order of cancellation of registration dated 10.06.2022, whereby the GST registration of the petitioner has been cancelled retrospectively with effect from 01.07.2017. The petitioner also impugns the Show Cause Notice dated 18.11.2021. With the consent of both parties, the petition is taken up for final disposal. By the Show Cause Notice dated 18.11.2021, the petitioner was called upon to show cause as to why the registration should not be cancelled for the following reason: “Collects any amount as representing the tax but fails to pay the same to the account of the Central/State Government beyond a period of three months from the date on which such payments become due.” The petitioner was engaged in the business of import and sale of Satellite Antenna Systems, Receivers and Components, etc., provisions of indirect selling, commissioning, and maintenance, and possessed GST registration. The Show Cause Notice dated 18.11.2021 was issued to the petitioner seeking to cancel its registration on the ground “Collects any amount as representing the tax but fails to pay the same to the account of the Central.” However, no details were mentioned in the Show Cause Notice about the tax collected but not deposited. Further, the said Show Cause Notice also does not put the petitioner on notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration. The learned counsel for the petitioner submits that due to certain business reasons, the petitioner shifted its office to Noida, Uttar Pradesh, starting from August 2021, and possessed the registration certificate of the same. Further, he submits that the petitioner has filed his returns till 30.11.2021, and thereafter, no business has been carried out from the registered office in Delhi. This retrospective cancellation of registration has significantly impacted the petitioner, as it not only nullifies the GST registration from a past date but also puts the petitioner at risk of facing severe penalties and interest for the period between 01.07.2017 and the date of cancellation. The petitioner argues that this retrospective application of the cancellation order is unjust and arbitrary, especially since no specific details were provided in the Show Cause Notice regarding the alleged tax collection and non-payment. This lack of specific information in the Show Cause Notice deprived the petitioner of a fair opportunity to respond to the allegations and present their case. Furthermore, the learned counsel for the petitioner emphasizes that the retrospective cancellation has caused substantial hardship to the petitioner. The business operations, which were conducted in good faith and under the assumption of valid registration, are now being retrospectively declared unlawful. This not only affects the petitioner’s business reputation but also imposes financial burdens due to the potential liabilities arising from the retrospective cancellation. The petitioner further contends that the Show Cause Notice issued on 18.11.2021 was vague and lacked essential details, making it impossible for the petitioner to understand the exact nature of the allegations and prepare an adequate defense. The petitioner also highlights that the GST registration was obtained legitimately and all due procedures were followed in the business operations. The sudden and retrospective cancellation without a fair hearing and without providing specific details violates the principles of natural justice. The learned counsel for the petitioner submits that due to the relocation of the office to Noida, Uttar Pradesh, in August 2021, and the subsequent cessation of business activities from the registered office in Delhi, there was a genuine oversight in updating the GST registration details. However, this oversight does not justify the drastic measure of retrospective cancellation, especially when the petitioner has been diligent in filing returns and complying with GST regulations until November 2021. The petitioner also points out that the retrospective cancellation order dated 10.06.2022 does not take into account the actual business circumstances and the compliance efforts made by the petitioner. Instead, it applies a blanket cancellation with retrospective effect, causing undue prejudice to the petitioner. The petitioner asserts that such retrospective cancellation should only be applied in cases of deliberate fraud or gross non-compliance, neither of which is applicable in the present case. Given the lack of specific allegations and the petitioner’s compliance history, the learned counsel argues that the impugned order is disproportionate and should be set aside. Additionally, the learned counsel for the petitioner stresses the importance of providing a fair hearing before passing any order that has significant financial and operational implications. In this case, the petitioner was not given a fair opportunity to present their case and address the specific allegations, as the Show Cause Notice was insufficiently detailed and the subsequent order did not consider the petitioner’s responses or business circumstances. The learned counsel concludes by requesting the court to quash the order of cancellation dated 10.06.2022 and the Show Cause Notice dated 18.11.2021, and to direct the respondents to restore the petitioner’s GST registration with immediate effect. The learned counsel further requests the court to ensure that any future proceedings related to the petitioner’s GST registration are conducted in a fair and transparent manner, with adequate notice and specific details provided to the petitioner, allowing them a fair opportunity to respond and present their case.