Facts of the Case

The petitioners, Scorp Industries & Anr., were issued a Show Cause Notice dated 13.09.2024.

The petitioners did not reply to the said Show Cause Notice. Consequently, their registration under the WBGST/CGST Act, 2017 was cancelled by an order dated 26.09.2024.

Thereafter, in terms of Section 30 of the said Act, the petitioners applied before the proper officer on 21.10.2024 seeking revocation of the cancellation order.

The Court noted that the fact of filing the revocation application was corroborated by GST REG-02, appearing at page 75 of the writ petition.

Subsequently, by a written notice dated 14.11.2024, a Show Cause Notice was issued asking why the application for revocation of cancellation should not be rejected.

The petitioners did not reply to the said notice. Thereafter, the application for revocation of cancellation was rejected by an order dated 21.02.2025.

The petitioners approached the Calcutta High Court challenging the action taken by the respondents.

During the proceedings, the petitioners contended that they could not respond to the Show Cause Notice because their consultant was not available.

The petitioners further submitted that while passing the original order cancelling GST registration, the respondents had relied upon a field visit report, but that report had never been supplied to them.

The respondents disputed this contention.

The High Court therefore examined whether the revocation application had been fairly dealt with when the authorities had relied upon a field visit report that was not shown to have been furnished to the petitioners.

Issues Involved

The principal issues involved in the case were:

  1. Whether the proper officer’s statutory power under Section 29 of the WBGST/CGST Act, 2017 to cancel GST registration must be considered alongside the taxpayer’s statutory opportunity under Section 30 to seek revocation of cancellation.
  2. Whether the rejection of the petitioners’ revocation application could be sustained when the respondents had relied upon a field visit report.
  3. Whether a field visit report relied upon by the GST authorities ought ordinarily to have been disclosed to the petitioners.
  4. Whether the Show Cause Notice dated 13.09.2024 demonstrated that the field visit report had been furnished to the petitioners.
  5. Whether the petitioners should have been afforded an opportunity, at the revocation stage, to respond to the field visit report.
  6. Whether the order dated 21.02.2025 rejecting the revocation application was liable to be set aside.
  7. Whether the proper officer should decide the revocation application afresh after supplying a copy of the field visit report.
  8. Whether the proper officer could, if necessary, conduct a further visit to the petitioners’ place of business.
  9. Within what period the fresh decision on the revocation application should be taken.

Petitioners’ Arguments

The petitioners contended that they had already exercised their statutory right under Section 30 by filing an application for revocation of cancellation of GST registration on 21.10.2024.

The petitioners submitted that:

  • they could not respond to the Show Cause Notice because their consultant was not available;
  • the respondents had relied upon a field visit report while passing the order cancelling their GST registration;
  • the field visit report had never been supplied to them;
  • reliance upon such material without furnishing it deprived them of a fair opportunity to respond; and
  • the revocation application required reconsideration after disclosure of the material relied upon by the authorities.

The petitioners’ counsel specifically argued that although the respondents had relied upon a field visit report while passing the cancellation order, the said report was never furnished to the petitioners.

Respondents’ Arguments

The respondents, represented by learned counsel for the State, disputed the petitioners’ contention concerning non-supply of the field visit report.

The judgment records that allegations and counter-allegations were made by the respective parties.

The respondents’ counsel specifically disputed the submission that the field visit report had not been supplied to the petitioners.

However, the Court independently examined the Show Cause Notice dated 13.09.2024 and observed that it did not demonstrate that the field visit report had been furnished to the petitioners.

Court’s Findings

The High Court considered the statutory framework under Sections 29 and 30 of the WBGST/CGST Act, 2017.

The Court observed that:

  • the statute confers a right upon the proper officer under Section 29 to cancel registration;
  • at the same time, Section 30 provides an opportunity to a registered taxpayer to seek revocation of cancellation of registration; and
  • in the present case, the petitioners had admittedly applied for revocation of cancellation.

The Court further noted that the petitioners’ revocation application had been rejected on 21.02.2025 because they had not responded to the Show Cause Notice.

On the issue of the field visit report, the High Court found that:

  • the respondents had relied upon a field visit report;
  • ordinarily, such field visit report ought to have been disclosed at the first instance;
  • the Show Cause Notice dated 13.09.2024 did not demonstrate that the field visit report had been furnished to the petitioners; and
  • since an application for revocation had already been made, the respondents should, at that stage, have afforded the petitioners an opportunity to respond to the field visit report.

The Court found that such opportunity had not been given.

Court Order / Final Decision

The High Court issued the following operative directions:

  1. The order dated 21.02.2025, whereby the petitioners’ application for revocation of cancellation had been rejected, was set aside.
  2. The proper officer was directed to decide the application for revocation afresh.
  3. Before taking a fresh decision, the respondents were required to supply the petitioners with a copy of the field visit report.
  4. The petitioners were to be afforded an opportunity in relation to the field visit report.
  5. If necessary, the proper officer could carry out a further visit at the petitioners’ place of business.
  6. A fresh decision was required to be taken by the respondents within six weeks from the date of communication of the High Court’s order.
  7. The writ petition was disposed of.

Important Clarification

1. Cancellation Power Under Section 29 Was Not Denied

The High Court did not hold that the proper officer lacks authority to cancel GST registration.

The Court expressly recognised that the statute confers a right upon the proper officer under Section 29 to cancel registration.

Therefore, the judgment should not be interpreted as invalidating the statutory cancellation power itself.

2. Section 30 Provides an Opportunity to Seek Revocation

The Court simultaneously emphasised that Section 30 provides an opportunity to a registered taxpayer to seek revocation of cancellation.

The existence of the cancellation power under Section 29 does not eliminate the statutory revocation mechanism under Section 30.

3. Field Visit Report Relied Upon by Authority Should Ordinarily Be Disclosed

A crucial finding of the Court was that where the respondents relied upon a field visit report, such report ordinarily ought to have been disclosed at the first instance.

This is particularly important where the material is relevant to cancellation of registration and subsequent consideration of a revocation application.

4. Show Cause Notice Did Not Demonstrate Supply of Field Visit Report

The Court specifically observed that the Show Cause Notice dated 13.09.2024 did not demonstrate that the field visit report had been furnished to the petitioners.

This factual finding was central to the relief granted.

5. Fresh Consideration, Not Automatic Restoration of GST Registration

The Court did not directly order automatic restoration of the petitioners’ GST registration.

Instead, it:

  • set aside the order rejecting the revocation application;
  • directed supply of the field visit report; and
  • required the proper officer to decide the revocation application afresh.

Therefore, the operative relief was fresh adjudication of the revocation application, not unconditional restoration of registration.

6. Further Physical Verification Was Permitted

The Court expressly permitted the proper officer, if necessary, to carry out a further visit to the petitioners’ place of business.

Thus, the judgment preserves the authority’s power to verify the factual position before deciding the revocation application afresh.

7. Six-Week Time Limit

The fresh decision must be taken within six weeks from the date of communication of the order.

The six-week period does not run merely from the date printed on the judgment; the operative direction links it to communication of the order.

Sections Involved

·         Section 29 of the WBGST/CGST Act, 2017 – Cancellation or Suspension of Registration

·         Section 30 of the WBGST/CGST Act, 2017 – Revocation of Cancellation of Registration

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783501170_1471compressed.pdf

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