Facts of the Case

The petitioner, P. Murugesan, a works contractor holding GSTIN 37ALKPM6797R1ZQ, challenged the cancellation of his GST registration effected by order dated 30.06.2023 (Reference No. ZA3706230938071). The cancellation followed a show cause notice dated 14.06.2023 alleging that the petitioner had obtained registration by fraud, wilful misstatement or suppression of facts under Section 29(2)(e) of the CGST/SGST Act, 2017. The petitioner submitted a reply dated 21.06.2023 on the premise that the notice related to a discrepancy in his office address, since he had been unable to amend his address on the GST portal after his registration was suspended.

Issues Involved

  1. Whether a show cause notice alleging fraud under Section 29(2)(e) without specifying the nature of the fraud, misstatement or suppression satisfies the requirements of natural justice.
  2. Whether the final cancellation order, which relied on an unconnected ground not clearly stated in the notice, could be sustained.

Petitioner's Arguments

  • The show cause notice was silent as to the nature of the alleged fraud, wilful misstatement or suppression of facts, defeating its very purpose and denying natural justice at the threshold.
  • The cancellation order relied on an altogether unconnected allegation set out in a manner different from what was indicated in the show cause notice, and neither the nature of the petitioner's reply nor the reasons for rejecting it were discussed in the order.

Respondent's Arguments

  • The Government Pleader for Commercial Tax opposed the writ petition on the ground that the cancellation was done in accordance with the rules.

Court Order / Findings

  • The Court held that notices and orders issued by public authorities must clearly state the allegation and be supported with reasons, and that the show cause notice in this case was bereft of the facts necessary to identify the nature of the fraud alleged.
  • Finding that the petitioner's reply was never discussed and no reasons for its rejection were recorded in the final order, the Court held there was a clear violation of the principles of natural justice and set aside both the show cause notice dated 14.06.2023 and the cancellation order dated 30.06.2023.
  • The respondent was directed to restore the petitioner's registration within one week, with liberty to issue a fresh show cause notice containing clear allegations, so that the petitioner could reply and be given an opportunity of hearing before any fresh order.

Important Clarification

A show cause notice alleging cancellation of GST registration for fraud, wilful misstatement or suppression of facts under Section 29(2)(e) must specify the particulars of the alleged fraud or misstatement; a notice that merely recites the statutory language without particulars fails to serve its purpose, and any cancellation order following such a notice, especially one that does not engage with the assessee's reply, is liable to be set aside for breach of natural justice.

Sections Involved

  • Section 29(2)(e), CGST/SGST Act, 2017 — empowers cancellation of registration obtained by fraud, wilful misstatement or suppression of facts.
  • Article 226, Constitution of India — invoked for the writ of mandamus seeking restoration of registration.

Decision – In Favour of

In favour of the Assessee — the show cause notice and cancellation order were set aside, with registration ordered restored within one week.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case Number: WP.No.24174 of 2023
  • CNR / Citation: WRIT PETITION NO: 24174 OF 2023
  • Coram: Hon'ble Sri Justice U. Durga Prasad Rao & Hon'ble Sri Justice B.V.L.N. Chakravarthi
  • Date of Order: 19 September 2023

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