Order Date – 20 March 2023

Parties: - M/S Shyam Sundar Sita Ram Traders Vs State Of U.P. And 2 Others

Facts –

• The Petitioner, M/s Shyam Sundar Sita Ram Traders, changed its business address and in this regard, the petitioner moved an amendment application, which was approved by the department on 09.02.2021.
• On 03.01.2021, a survey was conducted by the department at the earlier place of business and it was found that the firm is not existing. Accordingly, a show cause notice was issued on 11.02.2021 alleging that the registration is liable to cancel. The registration was cancelled on 31.03.2021 on the ground that as per the information received, the firm was indulged in availing fake ITC credit from bogus firm and the application for revocation of cancellation was also rejected.

Issue –

• Whether the cancellation of registration is in order?

Order –

• The Single Bench of Hon’ble High Court observed that the respondents have committed error while deciding the issue on the ground that several firms were availing wrong ITC credit and were essentially bogus firms.
• The issue was already dealt in the case of Apparent Marketing Private Limited by this court that once registration is granted, the same could be cancelled only in terms of the conditions prescribed under Section 29(2) and allegedly being a bogus firm is not a ground enumerated under Section 29(2).
• Hence it was held that the order rejecting the application for revocation was a wrong exercise of power by the department. The appellate order is equally bad, inasmuch as, no such ground was mentioned before passing the order of cancellation and, thus the impugned orders are set aside.