The Hon’ble Allahabad High Court in the case of Genius Ortho Industries v. Union of India [Writ Tax No. 542 of 2023 dated April 24, 2025] held that GST registration cannot be cancelled mechanically without taking into consideration the points in reply and the statements and evidence recorded during verification. Thereby, the order for GST registration cancellation was set aside.
Facts:
M/s. Genius Ortho Industries (“the Petitioner”) has filed a writ petition against the order dated February 27, 2023 (“the Impugned Order”), passed by the Joint Commissioner (Appeals) (“the Appellate Authority”). The matter was remanded back before the said bench of the Hon’ble High Court, after the writ petition filed was dismissed, and the appeal against the dismissal order was allowed by the Hon’ble High Court Division Bench with direction that said matter be decided on merits.
It is stated that the Petitioner’s business premises was surveyed based on which, a show cause notices (“SCN”) were issued for cancellation of Petitioner GST registration on the ground that discrepancy was noticed in physical verification and thereafter, though reply filed, was not considered satisfactory, the GST registration of the Petitioner was cancelled vide Order-in-Original dated December 19, 2022 (“the Impugned Order”) on the ground that no reply was submitted for non-availability of any input, finished goods or worker in the registered premises. Against the said Impugned Order passed, an appeal was filed, which was also dismissed vide order dated February 27, 2023 (“the Impugned Appellate Order”) by the Appellate Authority (Collectively referred as “the Impugned Orders”).
The Petitioner submitted that they were never put to any notice about the material found against the Petitioner during the survey of the business premises based on which the registration of the Petitioner has been cancelled and therefore, the Impugned Order has been passed in violation of principles of natural justice and the said points have also not been considered by the Appellate Authority.
Issues:
Whether GST registration can be cancelled mechanically without taking into consideration the points in reply and the statements and evidence recorded during verification?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 542 of 2023 held as under:
- Noted that, as per SCN issued for cancellation of GST registration only one sentence discrepancy was recorded based on the physical verification. Based on which the Impugned Order for registration cancellation citing the reason “non-availability of any input, finished goods or worker in the registered premises”.
- Further noted that, in the counter affidavit filed, it has clearly been mentioned that on being enquired during the physical verification of the premises, the watchman told “Kabhi Kabhar Chalti Hai”, which shows that the activities of business were being undertaken by the Petitioner.
- Further noted that, the no notice was ever put to the Petitioner, rather in the counter affidavit, a statement has been made that as per Rule 25 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) reports are available on GST Portal in Form GST REG-30. However, in the SCN issued, there is no mention of the said report, and, the action has been taken against the Petitioner, based on the observation in report issued in Form GST REG-30. Thereby, the Impugned Order is liable to be set aside on this ground.
- Opined that, the Impugned Order has been passed without giving any due weightage to the specific statement made by the watchman and no contrary material has been brought on record, the Impugned Order cannot be sustained in the eyes of law.
- Held that, the writ petition is allowed, and the matter is remanded back to the authority for reconsideration and passing of reasoned and speaking order, taking into consideration the submission made by the Petitioner.
Relevant Provision:
Rule 25 of the CGST Rules:
Rule 25. Physical verification of business premises in certain cases. –
(1) Where the proper officer is satisfied that the physical verification of the place of business of a person is required after the grant of registration, he may get such verification of the place of business done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.
(2) Where the physical verification of the place of business of a person is required before the grant of registration in the circumstances specified in the proviso to sub-rule (1) of rule 9, the proper officer shall get such verification of the place of business done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal at least five working days prior to the completion of the time period specified in the said proviso.
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