Allahabad HC: GST Registration Can’t be Cancelled Merely Stating a Firm as Bogus

The Allahabad High Court held in M/s Apparent Marketing Private Limited (petitioner) that the department (respondent) can not cancel the Goods and Services Tax (GST) registration of a taxpayer by merely describing a business as bogus. 

The assessee applied for registration under the Uttar Pradesh GST Act, 2017 for trading in pan masala and tobacco and the department has granted registration. After that, the department surveyed the petitioner’s business premises and issued a notice proposing the cancellation of registration. The department proposed the cancellation as the petitioner was found bogus during the inspection.

After that, the Assistant Commissioner, State-Tax, cancelled the petitioner’s GST registration without disclosing any further reason. The assessee applied to revoke the cancellation in response, and the Assistant Commissioner rejected that. Then, the assessee filed an appeal against the order of the Assistant Commissioner, and the same was dismissed by the Appellant Authority (AA). Finally, the assessee filed a writ petition before the High Court against the order of the AA.

The High Court observed the case and stated that the cancellation of GST registration would have serious consequences. This move takes away the fundamental right of a citizen to engage in business activity. Also, the Court stated that a presumption existed that the department had granted GST registration after due verification. Hence, the department will have a heavy burden to establish the facts that lead to the cancellation of registration.

Also, the Court added that the department could cancel the registration only if the assessee found one of the five conditions of Section 29(2). Since the statute has not used the word ‘bogus’, the Court ruled that registration under the Act cannot be cancelled by merely describing the firm as bogus.

The Court ruled that the notice seeking to cancel the petitioner’s GST registration remained defective as the reason for cancellation does not fall under Section 29(2) of the UP GST Act. Hence, the High Court allowed the petition and set aside the order passed by the Assistant Commissioner, State-Tax, cancelling the petitioner’s GST registration.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in