The Hon’ble High Court of Allahabad vide its order dated 15.07.2022 in the matter of M/s Ram Krishna Garg Supplier Vs. State of U.P.  and 4 Others in Writ Tax No. – 1064 of 2021, quashed the order cancelling the registration and subsequent appellate order confirming the same, passed on the basis of a show cause notice which is silent on the contravention of the provisions of the Act and rules made thereunder, for which the registration of the petitioner was cancelled.  It was held that a person to whom the notice proposing such a harsh civil consequence had a right to be informed of exact allegations levelled against him.

The Writ Petition was filed against order dated 23.09.2021 passed by the Proper Officer – Additional Commissioner, Grade – II (Appeal), Trade Tax, Banda, whereby the appellate authority confirmed the order dated 20.07.2021 passed by the Assistant Commissioner, Banda Sector Trade Tax, Banda, cancelling the petitioner’s registration in exercise of powers under Section 29(2) of the U.P.G.S.T. Act, 2017.

Held: –

• The Hon’ble Court after considering the submissions from the both sides, facts of the case and documents on record found that the order dated 20.07.2021 and the consequential appeal order dated 23.09.2021 are wholly unsustainable in law.
• It was taken note of by the Hon’ble Court that the petitioner was earlier issued a notice dated 08.06.2021 with respect to certain infractions committed by him under other laws regarding a service contract awarded by the Nagar Palika Parishad, Atarra, Banda, and the Petitioner duly replied to it. Subsequently, a show cause notice 09.07.2021 was issued to the petitioner under Section 29(2) of the Act, stating that its registration is liable to be cancelled for ‘1. Non compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed.
• That the petitioner duly replied to the aforesaid show cause, however, the impugned order dated 07.2021 came to be passed by the authority, confirming the cancellation of registration. The said order was confirmed in the appeal later, on the same lines referring to the allegations stated in the first notice dated 08.06.2021, which was issued with respect to infractions under other laws.
• It was found by the Hon’ble Court that Cancellation of registration has most serious civil consequences. That Section 29(1) of the Act provides for specific grounds on which the registration can be cancelled, from the date of occurrence of the certain events or retrospectively. However, the registration may not be cancelled on mere whims and fancies of the Proper Officer.
• The registration may be cancelled under Section 29(2) of the Act, if the registered person contravenes any of the provisions of the Act or rules made thereunder, or does not furnish returns for three tax periods consecutively, or does not furnish returns for continuous period of six months, or does not commence the business within six months of grant of registration, or registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
• It was found by the Hon’ble Court that in the instant matter the show cause notice dated 09.07.2021 was issued apparently referring to Section 29(2)(a) of the Act, alleging non-compliance of specific provisions of GST Act or rules. However, it was issued without disclosing the exact violation of the provision of the Act, or the rules.
• That unless the allegations are specified in the notice and the petitioner had been confronted to the material considered adverse to it, the notice dated 09.07.2021 would remain completely vague and mute.
• Further a person against whom a notice proposing such a harsh civil consequence has been issued, had a right to be informed of the exact allegations levelled against him. The cancellation of registration would bring the business of the petitioner to stand still, it’s a death of business and in violation of its fundamental right to do business.
• It was not shown that the alleged violations are such, that would result in cancellation of registration of the petitioner under Section 29(2) of the Act. That the entire exercise would be irregular since the petitioner is not confronted with the material which became basis for such allegations. 
• Lastly, it was found that the proceedings initiated and concluded without jurisdictional facts shown to exist.

The Hon’ble Court with the above findings allowed the writ petition and quashed the impugned orders dated 23.09.2021, 06.09.2021 & 20.07.2021, with the directions to restore the registration of the petitioner immediately, and giving liberty to initiate fresh proceedings, if required, on cogent material.