Appropriate Reasons Not Available In Drop Down Menu On GST Portal Cannot Be A Ground To Issue SCN Without Specific Allegation

Facts:- The Petitioner filed the writ petition before the Hon’ble High Court challenging the Show Cause Notice dated 06.10.2022 calling upon the petitioner to show cause why its registration under GST, 2017 not be cancelled.  Further, challenge was also made to order dated 21.10.2022 cancelling the registration of the Petitioner in pursuance of the said show cause notice.

 The Petitioner has assailed the impugned SCN on the ground that it does not disclose any reason or ground for proposing cancellation of its registration, which could be addressed by the petitioner.

It was submitted on the behalf of the respondents that the concerned officer has to select a reason for issuance of show cause notice from the drop down menu on GST Portal.  Since appropriate reason was not available in the drop-down menu, the concerned officer had selected the option ‘Others’.  However, in the remarks column uploaded by the concerned officer, he had stated that the registration is proposed to be cancelled on the basis of a letter dated 22.09.2022 and the said letter was also uploaded.

Held: –

• The Hon’ble Court after considering the submissions & facts of the case, found it necessary to refer to impugned SCN, which indicates that the only reason for which the petitioner’s registration was proposed to be cancelled was stated as, “others”.
• It was found by the Hon’ble Court that the impugned SCN fails to disclose any reason for the proposed action, which is incapable of receiving a meaningful response from the petitioner. It is well settled that Show Cause Notices are not meant to be issued mechanically to comply with a formality, and the same are to be issued to serve principles of natural justice.
• It was observed by the Hon’ble Court that the entire purpose of the Show Cause Notice is to enable the noticee to respond to the allegations on the basis of which an action is proposed. Therefore, the impugned SCN does not qualify to be considered as a Show Cause Notice at all.  Though, the petitioner filed reply to the impugned SCN by a letter dated 18.10.2022.
• It was further found by the Hon’ble Court that impugned show cause notice does not have any remarks referring to letter dated 22.09.2022, as stated by the respondents. Moreover, it does not even mention the contents of the said letter, which would enable the petitioner to know the allegations against it.
• That the submission on the behalf of the respondents that the concerned officer had no option but to choose from a drop-down menu, is clearly not the answer to the challenge laid by the petitioner to the impugned SCN. If the concerned authorities find that they are unable to communicate the allegation by way of a show cause notice, by selecting the options as available on the electronic system; the concerned authorities may consider issuing a physical show cause notice.
• Lastly, it was found by the Hon’ble Court that a show cause notice must clearly state the allegations that the concerned noticee has to meet. This being the essence of a show cause notice, any notice that does not qualify this criterion, cannot be considered as a show cause notice.

The Hon’ble Court with the above observations and findings, allowed the writ petition by setting aside the impugned SCN dated 06.10.2022, and the consequential impugned order dated 21.10.2022.  This order does not preclude the concerned officers to issue a show cause notice afresh and take an appropriate decision in accordance with law after affording the petitioner a reasonable opportunity to be heard.

To read the complete judgment 2023 Taxo.online 111