Karnataka High Court Permitted Superintendent of Central Tax To Pass Orders For Revoking Cancellation Of GST Registration On Filing Returns

The Karnataka High Court has permitted the Superintendent of Central Tax to pass suitable orders for revocation of the cancellation of the GST registration, if the petitioner/assessee files returns.

The single bench of Justice B. M. Shyam Prasad has observed that the cancellation of GST registration was without due opportunity and was arbitrary.

The petitioner submitted that the respondent visited his business premises on October 11, 2022, and seized certain invoices/documents under a mahzaar. The respondent called the petitioner to his office on November 15, 2022, purportedly for an investigation, but he was then arrested. He was in judicial custody from November 16, 2022, until he was admitted to bail and released on December 8, 2022. In the meanwhile, the Show Cause Notice was issued on November 17, 2022, to the petitioner alleging that he has issued invoices and bills without actual supply of either goods or services in violation of the provisions of the Central Goods and Services Tax Act, 2017 and the Rules to enable wrongful availing or utilising input tax credit or refund of tax.

The petitioner argued that when the petitioner was still in custody, the respondent cancelled the GST registration on November 30, 2022, recording that, on examination of the petitioner’s case against cancellation, he is of the opinion that it should be cancelled. If the petitioner was in custody from November 16, 2022, until December 8, 2022, when he was admitted to bail and released, the petitioner could not have been served with a Show Cause Notice dated November 17, 2022, and he could not have issued any response. But the GST registration is cancelled based on the Show Cause Notice holding that the petitioner's response is considered. It would be irrefutable that the cancellation of GST registration was without due opportunity and was arbitrary.

The department contended that penal proceedings have been initiated against the petitioner for issuing bills and invoices without actual supply of goods or services, and the cancellation must necessarily be an outcome of an investigation against the petitioner.

The department contended that the petitioner must be called upon to furnish the returns for the period for which the returns are not filed as a condition for revocation of the cancellation, as opposed to a cancellation by this order without any condition.

The court directed the petitioner to file returns within a period of four weeks from the date of receipt of a certified copy, and if the returns are filed accordingly, the respondent shall pass suitable orders within a period of two weeks.

Case Title: M/s S P Metals Versus Assistant Commissioner Of Commercial Taxes

Case No: Writ Petition No. 1135 Of 2023 (T-Res)

Citation: 2023 LiveLaw (Kar) 121

Date: 10.03.2023

Counsel For Petitioner: Lekha G.D.

Counsel For Respondent: Jeevan J. Neeralgi

Click Here To Read The Order