Order date – 16 November 2022

 Facts –

• The petitioner, M/s. S A TRADERS, assails the cancellation of the registration of the petitioner under the GST Act, 2017 is being illegal.
• The petitioner submits  that both the impugned show cause notice dated 01.10.2022 and the order for cancellation of registration dated 20.10.2022 could not show any violation inasmuch as, in the show cause notice it has been mentioned “in case the registration has been obtained by means of fraud, willful misstatement or suppression of facts”. 
• In the cancellation order, it has been mentioned “On verification of GSTR 1 vs GSTR 3B returns and sales turnover, it is observed that, within a span of five months, the TRP has made purchase and sale of scrap worth of Rs.9.63 Crores for which he has not submitted clear records. Hence the transactions appear to be suspicious and hence registration is cancelled.

Issue –

• Whether the show-cause notice and cancellation order are issued in order?

Order –

• The Hon’ble court found force in the submission of the petitioner, for, both show-cause notice as well as the order of cancellation of registration are dubious enough and failing to divulge the misdeed or fraud allegedly committed by the petitioner.
• While the show-cause notice says that “in case” the petitioner has committed any fraud, willful misstatement or suppression of facts, the order of cancellation of registration says that he has not submitted “clear records.” Both of them are not clear enough to understand the mind of the issuing authority. Therefore, there is no demur to hold that both impugned show cause notices as well as the order for cancellation of registration are not sustainable in the eye of law.
• The High Court relied on the decision of the Hon’ble High Court of Telangana which has set aside the impugned order of cancellation of the GST registration of the petitioner therein.
• Accordingly, this writ petition is allowed and giving liberty to the 1st respondent to issue fresh show cause notice in accordance with the governing law and rules to the petitioner indicating therein the clear reasons for the violations if any and give sufficient time to the petitioner herein to submit objections/reasons and consider the same and pass an appropriate order.