Proper officer must have independent assessment, while passing registration cancellation order

Facts of the Case:  The petitioner challenged an order cancelling their GST registration with retrospective effect. It was argued that SCN vaguely stated that the petitioner’s registration was proposed for cancellation under Section 29(2)(e) of the CGST Act, alleging fraud, wilful misstatement, or suppression of facts, without specifying any particulars. The petitioner had previously faced a similar cancellation of its GST registration in September 2023, but the registration was restored after the petitioner successfully applied for revocation.

The respondent argued that the Anti-Evasion Branch had directed the cancellation of the petitioner's registration, and the impugned SCN was issued in compliance with those instructions.

Held that:  The Court observed that the SCN lacked any specific details regarding the alleged fraud or misstatement, preventing the petitioner from providing a meaningful response. Impugned cancellation order appeared to have been passed based on directions from another authority without the proper officer's independent assessment. SCN did not mention retrospective cancellation, yet the order was made with effect from 03.07.2017. The court also noted that the cancellation order was passed based on directions from another authority (Anti-Evasion Branch) without the proper officer’s independent satisfaction, making the process flawed.

The court held that the SCN and the cancellation order violated principles of natural justice as no specific reasons were provided, and the petitioner was denied an opportunity to defend itself properly. Impugned cancellation order set aside, directed the respondent to reinstate the petitioner’s GST registration.

However, the court clarified that this order does not preclude the respondents from initiating proceedings for statutory violations or recovery of any dues, if warranted, in accordance with law.

To read the complete judgment 2024 Taxo.online 1962