Facts of the Case

M/S. Steel India, represented by its managing partner, carried an intra-court writ appeal before a Division Bench of the Kerala High Court against dismissal of its writ petition (WP(C) No.29033/2023) by a learned Single Judge. The appellant's GST registration had been cancelled vide Exts.P4 and P5 orders on the ground that it failed to demonstrate business activity at its declared premises and had issued invoices/bills without actual supply of goods or services, in violation of the GST Act and Rules. Although the appellant had filed Ext.P3 reply to the Ext.P2 show cause notice proposing cancellation, the department relied on a statement given by the appellant's landlord — said to be on inimical terms with the appellant — suggesting no business had been conducted at the tenanted premises from 2012 to May 2017.

Issues Involved

  1. Whether relegating the appellant to the statutory appellate remedy under the GST Act was proper despite the alleged denial of natural justice in not permitting cross-examination of the landlord.
  2. Whether reliance solely on the statement of an admittedly inimical landlord, without independent evidence, can validly sustain cancellation of GST registration.

Petitioner's Arguments

  • The Single Judge erred in relegating the appellant to the alternative statutory remedy despite a clear violation of natural justice occasioned by the cancellation orders.
  • No opportunity was extended to cross-examine the landlord whose statement was relied upon to cancel the registration, even though the landlord was on inimical terms with the appellant.
  • The cancellation orders (Exts.P4 and P5) deserved to be set aside for this procedural infirmity alone, rather than the appellant being pushed to an alternate remedy.

Respondent's Arguments

  • The appellant had not produced any tax invoice or other material to establish that it was actually carrying on business from the tenanted premises during the relevant period.
  • It was only in the face of this evidentiary gap that the department relied on the landlord's statement, which corroborated the absence of business activity at the premises, to cancel the registration.

Court Order/Findings

  • The Division Bench found no reason to interfere with the Single Judge's judgment, holding that the appellant had an effective alternative remedy of appeal before the GST appellate authority.
  • The Court clarified that if the appellant files an appeal within two weeks, the appellate authority must independently examine the evidence produced by the appellant on its own merits and must not be guided solely by the statement of a landlord known to be on inimical terms with the appellant.
  • Subject to this limited modification safeguarding an independent merits hearing, the writ appeal was otherwise dismissed.

Important Clarification

  • Availability of a statutory appellate remedy under the GST Act ordinarily bars entertaining a writ petition against a registration cancellation order, save where there is a clear breach of natural justice.
  • Where a cancellation order relies on a third-party statement from a source with a demonstrated conflict of interest (such as an inimical landlord), appellate authorities must independently weigh the assessee's own evidence rather than mechanically adopting that statement.
  • An assessee resisting cancellation for "non-conduct of business at declared premises" should proactively place tax invoices or other documentary proof of business activity on record, since the absence of such proof weakens the natural-justice challenge.

Sections Involved

  • GST Act, 2017 (registration cancellation provisions) — invoked to cancel GST registration for non-conduct of business at declared premises and issuance of invoices without actual supply.
  • First Appellate Authority mechanism under the GST Act — the statutory remedy to which the appellant was relegated.

Decision – In Favour of

Disposed of with directions, and on balance in favour of the Department at the writ-appeal stage — the cancellation orders were left standing and the appeal was dismissed — but with a significant procedural safeguard granted to the Assessee: an independent, merits-based hearing before the appellate authority that disregards the inimical landlord's statement, provided an appeal is filed within two weeks.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Kerala High Court (Division Bench)
  • Case No.: WA No. 1859 of 2023 (against WP(C) No.29033/2023)
  • CNR: Not available on record
  • Coram: Hon'ble Dr. Justice A.K. Jayasankaran Nambiar and Hon'ble Dr. Justice Kauser Edappagath
  • Decision Date: 26 October 2023
  • Disposal Nature: Writ appeal dismissed with limited modification; appellant permitted to file appeal before GST appellate authority

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