GST | No Real Use In Relegating Cases Of Undisputed Facts To Forum Of Alternate Remedy : Allahabad High Court

The Allahabad High Court has held that tax cases where the facts are undisputed and there are issues of jurisdiction and violation principles of natural justice involved may not be relegated to the Authorities.

The Court held that cases where minimum statutory compliances have been made are generally relegated to the forum of alternate remedy.

The bench comprising of Justice Saumitra Dayal Singh and Justice Shiv Shanker Prasad held

“Relegating the petitioner to the forum of alternative remedy in face of undisputed facts noted above may be of no real use or purpose. The writ court regularly relegates petitioners specifically in tax matters, to the forum of the statutory remedy of appeal where minimum compliances of law have been made. However on lack of jurisdiction or violation of principle of natural justice, the writ Court is equally inclined to offer interference to ensure due adherence to the rule of law both by the assessee as also the revenue authority.”

Petitioner was issued a show cause notice for cancellation of GST registration on grounds of wrongful availment or utilization of input tax credit or refund of tax. The petitioner responded by stating that a survey had been conducted by the DGGI, Delhi and its case is under investigation. The matter has not been finalized by the DGGI, Delhi. Further, it was stated that a writ petition was filed before the High Court. Since the matter was sub judice, petitioner requested that the suspension be kept in abeyance.

The GST Authority cancelled the registration of the petitioner with retrospective effect from the date of the show cause notice.

The Court observed that the order of cancellation of GST registration was wholly non-speaking as no violation of statutory requirement was stated in the order. The Court observed that the authority failed mention the details of the tax invoices, period for which ITC was wrongly availed and other details.

“Unless the show-cause notice had made any fact allegation against the petitioner, the vagueness of the reply may remain inconsequential,” held the Court.

The Court observed that cancellation of registration has serious impact on a business entity. It has the effect of closure of business as, no tax invoice may be issued, and no return may easily be filed if the registration is cancelled.

Accordingly, the Court disposed of the writ petition with a direction that suspension of registration of the petitioner may remain in force for a period of one month during which the Respondent authority may issue a fresh show cause notice for cancellation of registration.

Case Title: Hindustan Paper Machinery Industries v. Commissioner Cgst And 2 Others [WRIT TAX No. - 1047 of 2023]

Citation: 2023 LiveLaw (AB) 461

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