The Kerala High Court in the case of Kunhalavi N. vs. State Tax Officer vide W.P. (C) NO. 17333 OF 2024 dated 10.06.2024, quashed the cancellation of the petitioner's GST registration due to procedural improprieties in issuing the show cause notice in an incorrect form and vague manner. The show cause notice was issued in Form GST-REG-31 instead of the prescribed Form GST-REG-17 as per Rule 22 of the CGST/SGST Rules. Form GST-REG-31 is intended for suspension proceedings, not cancellation. The notice was found to be vague and lacking specific details required for cancellation proceedings.

The judgment underscores the necessity of adhering to statutory procedures in legal proceedings.

Facts of the case:- The petitioner, a registered dealer, did not file returns from December 2021 onwards. On 07.06.2022, the first respondent issued a show cause notice (Ext.P2) to the petitioner for non-filing of returns, using Form GST-REG-31. Subsequently. On 13.07.2022, the first respondent issued an order (Ext.P3) cancelling the petitioner’s registration for not filing returns for six consecutive months and not responding to the show cause notice.

The petitioner filed an appeal under Section 107 of the CGST/KSGST Acts against the cancellation order. However, the appeal was delayed by 361 days, and the petitioner feared it would be dismissed.

Later, the petitioner filed the present writ petition challenging the cancellation of his GST registration under the Central Goods and Services Tax Act and the Kerala State Goods and Services Tax Act (CGST/KSGST Acts). The cancellation was ordered due to non-filing of returns and failure to respond to a show cause notice.

Held that:- The show cause notice was issued in Form GST-REG-31 instead of the prescribed Form GST-REG-17 as per Rule 22 of the CGST/SGST Rules. Form GST-REG-31 is intended for suspension proceedings, not cancellation. The notice was found to be vague and lacking specific details required for cancellation proceedings.

The court reiterated that legal procedures must be followed strictly as prescribed by statutes. Deviations from prescribed procedures render the actions invalid. Cited previous judgments where similar procedural defects led to the setting aside of cancellation orders.

The Court held that Since the show cause notice was not issued in the correct form, the entire proceedings, including the cancellation order, were held to be without jurisdiction and invalid.

The court set aside the cancellation order due to procedural defects. The petitioner is required to file all defaulted returns along with tax, late fees, interest, and penalties within two weeks of the restoration of his registration.

To read the complete judgment 2024 Taxo.online 1254