Case Title | M/S Shyam Sundar Sita RamTraders vs State Of U.P. And 2 Others |
Court | Allahabad High Court |
Judges | Justice Pankaj Bhatia |
Citation | 2023 (03) GSTPanacea 82 HC Allahabad WRIT TAX No. – 991 of 2021 |
Judgment Date | 20-March-2023 |
Important Judgement, Please Bookmark.
Can GST Registration be cancelled on the ground that several firms were availing wrong ITC credit and were essentially bogus firms? Allahabad High Court decides in favour of Registered Person.
Facts and Timelines:
15-Dec-2020: The petitioner changed its business address and in this regard, the petitioner moved an amendment application.
09-Feb-2021: Address change was approved by the Department.
03-Jan-2021: Prior to approval of this Department did a survey.
As per the Survey report it was found that the firm is not existing/ running from the registered place. Author’s Note: Department surveyed at earlier place of business and not at the new place of business.
11-Feb-2021: Show Cause Notice is issued wherein it was alleged that the registration is liable to be cancelled on the basis of information received from STF that the firm is not existing/ running at the registered place.
It was recorded that the reply given by the petitioner was not satisfactory as at the time of survey, no business activity was found at the given address.
It was also recorded that the amendment as alleged was not given before the survey and was an after thought.
Author’s Note: Order has many issues like order said reply was not satisfactory but there was no reply submitted to SCN. Order said that Amendment was after thought though amendment of address was moved on 15-Dec-2020 and survey was done on 03-Jan-2021.
Petitioner moved Revocation Application (Sec. 30). 17-May-2021: Revocation Application was rejected. Petitioner alleged that this rejection order was passed without granting Personal Hearing whereas the Rejection Order stated that Notice was issued on 22-Apr-2021 but no reply.
The Petitioner approached High Court. High Court held: The order passed in appeal as well as the order cancelling the registration, it is apparent that the respondents have committed error while deciding the issue on the ground that several firms were availing wrong ITC credit and were essentially bogus firms.
Once registration is granted, the same could be cancelled only in terms of the conditions prescribed under Section 29(2) and allegedly being a bogus firm is not a ground enumerated under Section 29(2). The order rejecting the application for revocation was a wrong exercise of power by the department.
Heard Sri Pranjal Shukla, learned Counsel for the petitioner and learned Standing Counsel. The present petition has been filed by the petitioner challenging the order dated 17.05.2021 (Annexure No.9) passed by the respondent no.3, Assistant Commissioner, Commercial Tax, Bareilly, whereby the application filed for revocation of cancellation of registration has been rejected, as well as the order dated 14.09.2021 passed by the Additional Commissioner, Commercial Tax, respondent no.2 in Appeal No.APL1/057/2021, whereby the appeal has been dismissed.
The contention of the Counsel for the petitioner is that the petitioner is a registered Proprietorship firm and is doing the business in accordance with the Act and Rules.
On 15.12.2020, the petitioner changed its business address and in this regard, the petitioner moved an amendment application, which was approved by the department on 09.02.2021.
It is stated that on 03.01.2021, a survey was conducted by the department at the earlier place of business and it was found that the firm is not existing/ running from the registered Neutral Citation No. – 2023:AHC:60053 place.
It is stated that a show cause notice was issued on 11.02.2021 (Annexure No.3) wherein it was alleged that the registration is liable to be cancelled on the basis of information received from STF that the firm is not existing/ running at the registered place.
It is stated that in absence of the reply to the show cause notice dated 11.02.2021, the registration of the firm was cancelled vide order dated 31.03.2021 cancelling the registration on the ground that as per the information received, the firm was indulged in availing fake ITC credit from bogus firm.
It was recorded that the reply given by the petitioner was not satisfactory as at the time of survey, no business activity was found at the given address.
It was also recorded that the amendment as alleged was not given before the survey and was an after thought. It is stated that the petitioner thereafter moved an application under Section 30 of the GST Act seeking revocation of cancellation of the registration.
It is alleged that without issuing any show cause notice prior to taking decision on the application seeking revocation, an order came to be passed on 17.05.2021 rejecting the application of the petitioner.
In the said order, it was mentioned that despite notice dated 22.04.2021, no reply has been submitted. Aggrieved by the order dated 17.05.2021, the petitioner preferred an appeal which came to be dismissed mainly on the foundation that in terms of the information received from various sources, ITC reversal orders were passed and nothing was found with regard to the said firm at the time of survey.
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