Cancellation of the registration of the assessee without quantification of tax liability would be against the interest of revenue.

Facts: The Appellant/writ petitioner filed the appeal before the Hon’ble High Court challenging the order dated 22.08.2022 passed in WPA No. 18134 of 2022, being aggrieved of non-granting of any interim order pending disposal of the writ petition.

Held: –

• The Hon’ble Court took up writ petition, appeal and the connected applications for disposal with the consent of parties, and after considering the submissions made, facts of the case, found that Appellant filed a writ petition challenging a show cause notice for cancellation of registration on the ground that there is no final order passed for quantification of tax liability payable by the Appellant. That a bunch of documents have been annexed by the Appellant to show that since January 10, 2020, the Anti Evasion Wing and the audit department of the respondents have been issuing repeated summons to the Appellant.  However, till date no show cause notice has been issued either by the Anti Evasion Wing or the Audit department of the respondents.
• It was found by the Hon’ble Court quantification of liability arises after the issuance of show cause notice followed by the process of the adjudication, and the same has not been done in the present case and the liability is still to be quantified. Further, it is not clear as to why the department is prolonging the matter for such a long period and not issuing a show cause notice, to finalise the same after process of adjudication.
• That undoubtedly, the procedure has not been followed in the present case by the respondents. Thus, the show cause notice proposing to cancel the registration of the appellant would not sustainable.
• It was also found by the Hon’ble Court that suspension of the registration of the taxpayer would be counterproductive and would work against the interest of revenue, as the taxpayer would not be able to issue invoices and consequently, not be in a position to carry on its business. This would ultimately impact the recovery of taxes.  Therefore, the respondent department has to take a practical and realistic view in the matter and the taxpayer not to treated as a person hostile to the department.
• Furthermore, from the list of dates it appears that summons were repeatedly issued to the Appellant and the appellant has been duly responding to the summons by submitting the representations to the department. However, it is not clear that why the authorities did not proceed further pursuant to the summons.
• The Hon’ble Court with the above, ordered for revoking the suspension of appellant’s registration immediately with a direction to the appropriate authority to issue show cause notice within a time frame and take up the matter for adjudication, in accordance with law in the event tax has not been remitted by the taxpayer.

The Hon’ble Court with the above findings disposed of the writ petition along with the appeal with the directions to the respondent authority to revoke the suspension of the registration of the appellant immediately and to issue a show cause notice within seven days of the receipt of the server copy of the order. The appellant shall be given a reasonable time to submit his objection as against the show cause notice. Thereafter, the show cause notice shall be adjudicated and a reasoned order be passed on merits and in accordance with law.

To read the complete judgment 2022 Taxo.online 906