The Telangana High Court stated that every file has nexus with somebody’s ‘life’ or ‘liberty’, GST registration can’t be canceled without reason.
The bench of Justice Sujoy Paul And Justice Namavarapu Rajeshwar Rao observed that the singular reason assigned in the notice is that the Section 29(2)(e)-registration obtained by means of fraud, willful misrepresentation or suppression of facts”.
The court said that apart from this bald statement, there exists nothing in the show cause notice which can throw light as to what is the nature of ‘fraud’ or ‘willful misrepresentation’ or ‘suppression of fact’ by the petitioner. Thus, show cause notice is cryptic and an example of non application of mind. In absence of factual basis and necessary details, notice becomes vulnerable.
The court said that on a regular basis, it is painfully noticing these kinds of notices, whereby, without assigning adequate reasons, the business of the taxpayer is suddenly suspended.
“In absence of basic reasons available in the show-cause notice, the party aggrieved by it cannot even prefer an effective representation. We wonder how in such an insensitive and mechanical manner, the registrations are being suspended by issuing defective show-cause notices. Such orders certainly have an adverse impact on the livelihood of taxpayer and hits Article 21 of the Constitution. The authorities must remind themselves that the words ‘LIFE’ and ‘FILE’ contain same letters”, the court said.
Counsel for the petitioner advanced singular point by contending that only so-called ‘reason’ shown in the show-cause notice is mere reproduction of language of Section 29(2)(e) of the Central Goods and Service Tax Act, 2017 and does not contain necessary details on the strength of which such a ‘conclusion’ has been drawn.
It is submitted that the notice is so cryptic that no one can file any effective reply. The business of petitioner is abruptly suspended which has a serious impact on his right to livelihood which is guaranteed under Article 21 of the Constitution of India.
The bench placed reliance on the case of T S R Exports v. Superintendent, GST in which it was observed that the show cause notice, should spell out the factual backdrop of breach, on the strength of which the department has rejected and concluded that Section 29 (2) (e) of the Act, can be invoked. If minimum factual backdrop and nature of breach is not mentioned with accuracy and precision, the petitioner was not in a position to file reply.
The court observed that the apex court in the Canara Bank vs. Debasis Das held that Notice is the first limb of this principle. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. This is one of the most important principles of natural justice. It is after all an approved rule of fair play. The concept has gained significance and shades with time.
The court stated that every file has a nexus with somebody’s ‘life’ or liberty. Thus, the authorities should sensitize themselves and should not pass order/notice in the mechanical manner it is passed in the present case.
Case Details
Citation: WRIT PETITION No.17400 of 2024
Court: Telangana High Court
Date of Decision: 08/07/2024
