M/S.Pankaj Cottage vs The Goods And Service Tax Officer
2022 Latest Caselaw 12031 Ker

                IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                PRESENT
                 THE HONOURABLE MR. JUSTICE GOPINATH P.
    THURSDAY, THE 22ND DAY OF DECEMBER 2022 / 1ST POUSHA, 1944
                        WP(C) NO. 28783 OF 2022
PETITIONER:

              M/S.PANKAJ COTTAGE
              TEMPLE ROAD, MUNNAR
              IDUKKI DISTRICT,PIN - 685612
              REPRESENTED BY MANAGING PARTNER E.J VARKEYACHAN

              BY ADV S.SUJIN

RESPONDENTS:

    1         THE GOODS AND SERVICE TAX OFFICER
              CENTRAL TAX AND CENTRAL EXCISE
              MUNNAR, IDUKKI DISTRICT, PIN - 685612

    2         THE ASSISTANT COMMISSIONER CENTRAL TAX AND CENTRAL
              EXCISE, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE,
              GOVERNMENT OF INDIA, IDUKKI DIVISION,
              K.P VARKEYS MALL, IIND FLOOR,
              ROTARY JUNCTION, THODUPUZHA -, PIN - 685584

    3         THE APPELLATE AUTHORITY GOODS AND SERVICE TAX
              C.R BUILDING, I.S PRESS ROAD,
              COCHIN, PIN - 682018

              BY ADV M.S.AMAL DHARSAN



     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
25.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.P (C) No.28783/2022                    -2-

                                 JUDGMENT

The petitioner is in this court aggrieved by Ext.P1 order cancelling the

registration granted to the petitioner under the Central Goods and Services Tax

Act/ the State Goods and Services Tax Act [Hereinafter referred to as the

'CGST/SGST Acts"], in the exercise of jurisdiction under Section 29 of those

enactments.

2. The facts necessary for an adjudication of the issue raised may be

briefly noticed. The petitioner suffered Exhibit P1 order cancelling the registration

granted under the CGST/SGST Acts. Ext P.1 was issued on 04-04-2022. Though

Ext.P.1 appears to have been preceded by a show cause notice issued electronically,

the petitioner has a case that the show cause notice never came to his attention. On

coming to know of the order cancelling the registration, the petitioner applied for

revocation, which application was rejected by Ext.P3, finding that the application

for revocation was beyond the time prescribed under Section 30 of the CGST/SGST

Acts. The petitioner has therefore filed an appeal under Section 107 of the

CGST/SGST Acts, and the same is pending consideration of the first appellate

authority.

3. Mr. N.N. Suganapalan, learned Senior Counsel appearing for the

petitioner, on the instructions of Adv. S. Sujin, would contend that the entire

procedure adopted by the respondents in cancelling the registration of the

petitioner is absolutely illegal and unsustainable. He points out with reference to

the show cause notice issued prior to cancellation of the registration that the said

show cause notice itself is not in the manner prescribed by the Rules. It is submitted

that the show cause notice should have been issued in Form GST REG-17. It is

submitted that the show cause notice is issued in Form GST REG-31, which is the

form applicable to proceedings leading to the suspension of the registration for

reasons specified. It is further pointed out with reference to the particulars required

in the show cause notice [Form GST REG-17] that none of those particulars are

specified in Ext.P5 show cause notice issued to the petitioner. It is submitted that

though Ext.P6 specifies that it is issued in form GST REG-31, even that form has not

been used in its entirety. It is submitted that the officer issued a notice in a form

containing vague details of the reasons for cancellation, and this is not permissible

in law. The Learned Senior Counsel appearing of the petitioner refers to the

judgment of a Division Bench of the Gujarat High Court in Aggarwal Dyeing

and Printing v. State of Gujarat (Judgment dated 24.2.2022 in Special Civil

Application No. 18860/2021 and connected cases) as also the judgment of the same

Court in Sing Traders v. State of Gujarat (Judgment dated 6.4.2022 in Special

Civil Application No. 6315/2022) to contend that where the show cause notice is

vague and where the order of cancellation also does not specify the factors which

lead to the cancellation of registration, the entire proceedings must be held bad in

law. He submits that the delay in filing returns and payment of tax for the period of

default was not wilful and was on account of severe financial stress.

4. Adv. Thushara James, the learned Senior Government Pleader

appearing for the respondents, would refer to the provisions of Sections 29 and 30

of the CGST/SGST Acts and the provisions of Rule 22 (1) & 21 A of the CGST/SGST

Rules as also the relevant forms namely Form GST REG-17 and Form GST REG-31

to contend that the scheme of cancellation of registration is inbuilt into the

provisions of Sections 29 and 30. It is submitted that the CGST/SGST Acts being

fiscal legislations, the provisions must be interpreted strictly in favour of the

revenue. It is submitted that the provisions in Section 29 are incorporated for the

purposes of ensuring strict compliance with tax laws and the failure of the

petitioner to file returns (which fact is not disputed) led to the cancellation. It is

submitted that the judgment of the Madras High Court in Suguna Cutpiece

Center v. Appellate Deputy Commissioner( ST) GST), Salem; (2022) 99

GSTR 386 (Mad) and those of the Gujarat High Court in Aggarwal Dyeing and

Printing (supra) & Sing Traders actually travel outside the scheme of

provisions contained in that Act and therefore should not be followed by this court.

It is submitted that the notices issued are ones generated by the system and convey

with sufficient clarity the reason for taking steps for cancellation. The learned

Senior Government Pleader also relies on the judgment of the Karnataka High

Court in M/s. M.S. Retail Private Limited v. Union of India [Judgment

dated 7-10-2020 in W.P No. 9041 of 2020] as also the judgment of the Madhya

Pradesh High Court in Rajdhanai Security Force Pvt. Ltd. v. Union of

India [Judgment dated 25.4.2022 in W.P No. 11498 of 2021] to contend that this

Court should not interfere with the order cancelling the registration of the

petitioner as there is no error of jurisdiction.

5. Having heard the learned Senior Counsel for the petitioner and the

learned Senior Government Pleader and Adv.Alfred, learned counsel appearing for

the 2nd respondent, I am of the view that the petitioner is entitled to succeed. The

reasons which compel me to take such a view are the following: -

(i) Ext.P5 show cause notice issued to the petitioner has been issued in Form

GST REG-31. That form is to be issued in relation to proceedings for suspension of

registration and is issued with reference to Rule 21A of the CGST/SGST Rules. It is

clear that Form GST REG-31 is one relatable to proceedings for suspension of

registration and cannot be treated as a show cause notice under Rule 21 of the

CGST Rules, which requires the issuance of a notice in form GST REG-17. Ext.P5

does not even contain all the details contemplated by the form appended to the

Rules. A reading of Ext.P5 suggests that the Officer issued the notice in form GST

REG-31 by omitting specific details from the form and by treating it as a notice for

cancellation. It is a principle at the heart of administrative law that where the law

requires a thing to be done in a particular manner, it must be done in that manner

alone. In Babu Verghese v. Bar Council of Kerala, (1999) 3 SCC 422, it

was held:-

"31. It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all. The origin of this rule is traceable to the decision in Taylor v. Taylor [(1875) 1 Ch D 426 : 45 LJCh 373] which was followed by Lord Roche in Nazir Ahmad v. King Emperor [(1936) 63 IA 372 : AIR 1936 PC 253] who stated as under:

"[W]here a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all."

32. This rule has since been approved by this Court in Rao Shiv Bahadur Singh v. State of V.P. [AIR 1954 SC 322 : 1954 SCR 1098] and again in Deep Chand v. State of Rajasthan [AIR 1961 SC 1527 : (1962) 1 SCR 662] . These cases were considered by a three-Judge Bench of this Court in State of U.P. v. Singhara Singh [AIR 1964 SC 358 : (1964) 1 SCWR 57] and the rule laid down in Nazir Ahmad case [(1936) 63 IA 372 : AIR 1936 PC 253] was again upheld. This rule has since been applied to the exercise of jurisdiction by courts and has also been recognised as a salutary principle of administrative law."

Therefore, the action taken by the officer by initiating proceedings in form GST

REG-31 of the CGST Rules and completing the proceedings for cancellation of

registration by issuing Ext.P1 order is clearly without jurisdiction. If the Officer

wishes to initiate proceedings for cancellation of registration, he must issue a notice

as specified in Rule 21 of the CGST Rules and in form GST REG-17 and not in form

GST REG-31.

(ii) The Division Bench of the Gujarat High Court in Aggarwal Dyeing and

Printing (Supra) has considered an almost identical situation. The Court

considered the contents of the show cause notice issued in that case and came to the

conclusion that the show cause notice was woefully inadequate inasmuch as it did

not specify the reasons which compelled the Officer to initiate action for

cancellation of registration. Even in the facts of this case, the show cause notice

(Ext.P.5) reads thus:-

"Show Cause Notice for Cancellation of Registration

Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:-

1. returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017

Observations

Failure to furnish returns for a continuous period of six months You are hereby directed to furnish a reply to the notice within thirty days from the date of service of this notice.

xx xx xx xx xx xx"

Apart from the fact that Ext.P.5 is issued in the wrong form, it is also bad for the

complete absence of any detail. It is clearly vague and therefore the law laid down in

the judgments of the Gujarat High Court in Aggarwal Dyeing and Printing

(supra) and Sing Traders (supra) clearly apply. I am in respectful agreement

with the views expressed in those decisions. The judgments of the Karnataka High

Court and the Madhya Pradesh High Court relied on by the learned Senior

Government Pleader appear to have been handed down in completely different fact

situations. I am also not inclined to follow the law laid down by the Court in those

judgments;

(iii) The contention taken by the learned Government Pleader that since the

Court deals with fiscal legislations, the law must be strictly interpreted in favour of

the revenue is not a principle that applies to the situation that this Court is

concerned. The Constitution Bench of the Supreme Court in Commissioner of

Customs (Import), Mumbai v. Dilip Kumar and Company and others;

(2018) 9 SCC 1; held that provisions of a taxing statute have to be strictly

construed in favour of the assessee in the event of doubt or ambiguity while

exemption notifications granting concessions or exemptions have to be generally

interpreted in favour of the revenue, again in the case of ambiguity. However, the

Supreme Court in Government of Government of Kerala and another v.

Mother Superior Adoration Convent; (2021) 5 SCC 602 has taken the view

that where concessions or exemptions are granted with a specific purpose of

promoting or encouraging a certain activity the principle that such

concessions/exemptions must be interpreted in favour of the revenue does not

apply. In the facts of these cases, this Court is concerned with the provisions of

Sections 29/30 of CGST/SGST which gives to the power to cancel registration and

also to revoke it. These are not provisions which need to be interpreted with

reference to the principles laid down in the Dilip Kumar (supra) and in Mother

Superior Adoration Convent.

For the above reasons, the writ petition is allowed. Ext.P1 stands quashed. The

quashing of the impugned order of cancellation will not have the effect of absolving

the petitioner of any fiscal liability. The petitioner will be required to file all

defaulted returns together with tax, late fee, interest, penalty etc., within a period of

two weeks from the date on which the registration of the petitioner is restored in

compliance with this judgment.

Any other contentions taken in the writ petition are left open.

Sd/-

GOPINATH P.

                                                      JUDGE


AMG/SKP


                        APPENDIX OF WP(C) 28783/2022

PETITIONER EXHIBITS

Exhibit P1        TRUE COPY OF THE ORDER DATED 04/04/2022

Exhibit P2        TRUE COPY OF THE REQUEST SUBMITTED BY THE
                  PETITIONER DATED 14/07/2022

Exhibit P3        TRUE COPY OF THE REPLY DATED 22/08/2022 ISSUED BY
                  THE 2ND RESPONDENT

Exhibit P4        TRUE COPY OF THE MEMORANDUM OF APPEAL SUBMITTED BY
                  THE PETITIONER BEFORE THE APPELLATE AUTHORITY DATED
                  29/08/2022

Exhibit P5        TRUE COPY OF THE SHOW CAUSE NOTICE DATED 03/02/2022