Pantone Enterprises (P.) Ltd. VS Union of India

The writ applicants have essentially challenged the legality and validity of the orders issued by respondents Nos. 2 to 4, which purported to cancel the registration granted to the writ applicant under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017).

The brief facts of Special Civil Application No. 6650 of 2022 are as follows:

1. Writ Applicant Background: The writ applicant is a registered company incorporated under the Companies Act, 1956, engaged in trading various agricultural products, such as Castor Seeds, Jeera, Chana, Coriander, R.M. Seeds, Turmeric, Cotton Oil Cake (Kapas Khali), and trading of Bullion derivatives on the multi-stock commodity exchange. The writ applicant possesses the requisite registration numbers under relevant provisions of different Acts.

2. Transition to CGST: With the implementation of the Goods and Services Tax Act, 2017, the writ applicant applied for migrating its registration from the Gujarat Value Added Tax (GVAT) Act to the CGST Act through an application dated 21.03.2017. The necessary documents were furnished to the respondent authorities.

3. Provisional and Final Registration: The writ applicant was initially granted a provisional registration certificate on 25.06.2017 under the CGST Act, 2017. Subsequently, a final registration certificate bearing GSTN registration No. 24AAICA0476H1ZU was granted with effect from 01.07.2017. A photocopy of this final registration certificate has been placed on record.

4. Cancellation of Registration: Despite these steps, the respondents Nos. 2 to 4 issued orders canceling the writ applicant’s registration under the CGST Act, 2017. The writ applicants have challenged these orders, arguing that the cancellation is illegal and invalid.

The writ applicants seek to have the cancellation orders set aside, maintaining that their registration under the CGST Act, 2017, was lawfully obtained and that the respondents’ actions are without basis and contrary to the law.

The petitioner has regularly filed its returns as required under the GST Act since July 2017, claiming to have fulfilled all its legal obligations. Despite this, on March 7, 2021, the petitioner was served with a show cause notice in Form GST REG-17/31 under Section 29(2)(e) of the Central Goods and Services Tax (CGST) Act, 2017, read with Rule 21 of the CGST Rules, 2017. Additionally, the petitioner’s registration was suspended from March 7, 2021. The contents of the show cause notice are as follows:

The writ applicant has regularly filed its returns as required under the GST Act since July 2017 and claims to have discharged all its liabilities under the law.

Despite this, the writ applicant was served with a show cause notice dated 07.03.2021 in Form GST REG-17/31, exercising the power conferred under Section 29(2)(e) of the CGST Act, 2017, read with Rule 21 of the Central Goods and Services Rules, 2017 (the CGST Rules, 2017). Consequently, the registration of the writ applicant was suspended with effect from 07.03.2021. The contents of the show cause notice were not detailed in the provided text.

The writ applicant submitted a reply on 12.03.2021, drawing the attention of respondent No.2 to the fact that the notice did not spell out any reasons or basis for the Proper Officer’s belief that the registration was liable for cancellation. The writ applicant argued that the suspension of registration had completely halted its business activities and requested the revocation of the suspension and withdrawal of the show cause notice.

However, without considering the reply dated 12.03.2021, the respondent authority proceeded to pass an order for the cancellation of the registration on 17.03.2021. The contents of this order were also not detailed in the provided text.

The writ applicant has consistently filed its returns as required under the GST Act since July 2017 and claims to have fulfilled all its liabilities under the law. Despite this, a show cause notice dated March 7, 2021, was issued to the writ applicant in Form GST REG-17/31 under Section 29(2)(e) of the CGST Act, 2017, read with Rule 21 of the CGST Rules, 2017. The registration of the writ applicant was suspended on the same date.

In response, the writ applicant submitted a reply on March 12, 2021, highlighting that the notice lacked any specific reasons or basis for the suspension and argued that the suspension had halted their business activities, requesting the suspension to be revoked and the notice withdrawn. However, without considering this reply, the respondent authority proceeded to cancel the registration on March 17, 2021.

The writ applicant further contended that they had submitted various documents, particularly regarding new addresses approved in the original registration certificate, and had requested a virtual hearing due to the pandemic, which was denied by the respondent No.2. This action was claimed to be in violation of the principles of natural justice. The writ applicant also referred to instructions issued by the Central Board of Indirect Taxes and Customs on August 21, 2020, arguing that these instructions should have been binding on respondent No.2, and thus the cancellation should be reconsidered.

Following these events, a new show cause notice was issued by respondent No.3 on April 8, 2021, directing the writ applicant to furnish a reply and to appear for a hearing on April 16, 2021.

The writ applicant has consistently filed its GST returns since July 2017 and claims to have discharged all its liabilities under the law. Despite this, on March 7, 2021, the writ applicant was issued a show cause notice in Form GST REG-17/31 under Section 29(2)(e) of the CGST Act, 2017, read with Rule 21 of the CGST Rules, 2017, leading to the suspension of their registration from the same date. The writ applicant responded on March 12, 2021, highlighting that the notice lacked specific reasons or basis for the suspension and requested the revocation of the suspension.

However, without considering the response, the respondent authority proceeded to cancel the registration on March 17, 2021. The writ applicant contended that the request for a virtual hearing, given the pandemic situation, was ignored, violating the principles of natural justice. The applicant also referred to the Central Board of Indirect Taxes and Customs’ instructions (F.No.390/Misc/3/2019-JC, dated August 21, 2020), which should have been binding on the respondent.

Subsequently, on April 8, 2021, respondent No. 3 issued another show cause notice, requiring a reply by April 12, 2021, and scheduled a hearing for April 16, 2021. Despite the writ applicant’s timely reply, respondent No. 3 rejected the application for revocation of the GST registration cancellation on April 27, 2021, without adequately considering the provided responses and documents, including the new addresses approved by the department in the original registration certificate.

The writ applicant has consistently filed its GST returns since July 2017 and claims to have met all legal liabilities. Despite this, the applicant received a show cause notice on March 7, 2021, in Form GST REG-17/31 under Section 29(2)(e) of the CGST Act, 2017, and Rule 21 of the CGST Rules, 2017, which also suspended their registration effective from the same date.

In response, the writ applicant submitted a reply on March 12, 2021, arguing that the notice did not provide any valid reasons or basis for the suspension and that this action halted their business operations. They requested the revocation of the suspension and withdrawal of the notice. However, without considering this reply, the respondent authority cancelled the registration on March 17, 2021.

The applicant highlighted that the cancellation was done without providing a requested virtual hearing, violating principles of natural justice. They referenced instructions issued by the Central Board of Indirect Taxes and Customs, dated August 21, 2020, which the respondent authority ignored.

A subsequent show cause notice was issued on April 8, 2021, by the respondent authority, demanding a reply and setting a hearing for April 16, 2021. The writ applicant replied on April 12, 2021, but their request to revoke the cancellation was again rejected on April 27, 2021.

Aggrieved by this, the writ applicant appealed to the Office of Commissioner (Appeals), Ahmedabad, under Section 107 of the CGST Act, 2017, on May 7, 2021. They reiterated that the show cause notice lacked substantive reasons beyond the language of Section 29(2)(e) of the CGST Act.

The petitioner in this case has been regularly filing its GST returns since July 2017 and claims to have fulfilled all its obligations under the GST Act. However, despite this, the petitioner received a show cause notice dated March 7, 2021, in Form GST REG-17/31 under Section 29(2)(e) of the CGST Act, 2017, along with Rule 21 of the CGST Rules, 2017, resulting in the suspension of its GST registration from March 7, 2021. The notice did not specify grounds for registration cancellation, prompting the petitioner to reply on March 12, 2021, highlighting the lack of reasons and requesting the withdrawal of the suspension and notice.

Nevertheless, disregarding the petitioner’s response, the respondent authority proceeded to cancel the registration on March 17, 2021. The petitioner contended that the cancellation was unjust as it halted their business activities and violated principles of natural justice, citing instructions from the Central Board of Indirect Taxes and Customs. Subsequently, a show cause notice dated April 8, 2021, was issued by another authority, calling for a reply and a hearing on April 16, 2021, which the petitioner complied with by submitting a response on April 12, 2021.

Despite the petitioner’s submissions, the authority rejected the application for revocation of the registration cancellation on April 27, 2021. Dissatisfied with this decision, the petitioner appealed to the Commissioner (Appeals), Ahmedabad, on May 7, 2021, arguing that the cancellation lacked substantive reasons beyond mere citation of legal provisions. The appeal emphasized procedural irregularities, including reliance on undisclosed instructions and lack of opportunity for rebuttal.

After hearings and review, the Additional Commissioner (Appeals) affirmed the rejection on March 2, 2022, prompting the petitioners to seek relief from the court. The central issue before the court was whether the cancellation of registration and subsequent appellate decisions were justified under the law.

During the proceedings, arguments were presented by both parties, with the petitioners represented by Mr. Prakash Shah and Mr. Dhaval Shah, and the respondent authorities represented by Mr. Nikunt Raval. The primary contention focused on the procedural fairness and substantive grounds for the cancellation and subsequent appellate decisions.

In summary, the case revolves around the legality and procedural fairness of the cancellation of GST registration and subsequent appellate decisions, with the petitioners seeking relief from the court based on alleged violations of natural justice and procedural irregularities during the administrative process.

The writ applicant in this case has consistently filed its GST returns as required under the GST Act since July 2017 and claims to have fulfilled all its obligations under the law. Despite this, on March 7, 2021, the applicant received a show cause notice in Form GST REG-17/31 under Section 29(2)(e) of the CGST Act, 2017, along with Rule 21 of the CGST Rules, 2017, which led to the suspension of its GST registration from the same date. The notice did not specify reasons for the registration’s potential cancellation, prompting the applicant to reply on March 12, 2021, requesting the suspension be revoked and the notice withdrawn.

However, on March 17, 2021, disregarding the applicant’s response, the respondent authority proceeded to cancel the registration. The applicant highlighted procedural irregularities, including the failure to provide a virtual hearing option due to the pandemic and the authority’s non-compliance with instructions from the Central Board of Indirect Taxes and Customs.

Following this cancellation, a subsequent show cause notice was issued on April 8, 2021, by another respondent calling for a reply and a hearing on April 16, 2021. Despite the applicant’s reply on April 12, 2021, the respondent proceeded to reject the application for revocation of the cancellation on April 27, 2021.

Aggrieved by this decision, the applicant appealed to the Office of Commissioner (Appeals), Ahmedabad, under Section 107 of the CGST Act, 2017, on May 7, 2021. The appeal contended that the cancellation lacked substantive reasons beyond citing Section 29(2)(e) of the Act and highlighted procedural lapses, including reliance on undisclosed instructions and the absence of documentary evidence.

The Additional Commissioner (Appeals) upheld the rejection of the revocation on March 2, 2022, prompting the writ applicants to approach the court seeking relief. In court, the primary issue revolved around the validity of the cancellation order and the subsequent appellate decision.

During the proceedings, the applicant’s counsel emphasized the procedural deficiencies in the show cause notices and cancellation orders, arguing they violated statutory provisions and previous court decisions on similar cases. Specifically, they critiqued the retrospective suspension of registration and the lack of specific details in the notices, compounded by the pandemic-related challenges in accessing due process.

In conclusion, the court was tasked with assessing the legality of both the cancellation order and the appellate decision, considering the arguments presented by both parties regarding procedural fairness and compliance with statutory requirements.

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