Telangana HC slams ‘mechanical way’ of issuing GST show cause notice

The Telangana High Court has set aside a “mechanical” show cause notice and subsequent order for cancellation of goods and services tax (GST) registration against a proprietary concern.

The case relates to an assessee engaged in the business of purchasing and selling iron scrap. Show cause notices were issued to the assessee, proposing to cancel its GST registration in case it has been obtained by “means of fraud, willful misstatement or suppression of facts”.

The court noted that the tax authorities have only mentioned that in case the petitioner has obtained GST registration by means of fraud, willful misstatement or suppression of facts, then the GST registrations were liable to be cancelled. No particulars of any such fraud etc have been mentioned.

The notice gave seven working days for a reply by the assessee, but he was summoned the very next day. Also, the registration was cancelled a day after the reply was given.

The court observed that on such surmises and conjectures, no show cause notices could have been issued by the authorities. It observed that a show cause notice for cancellation of GST registration has got serious consequences and it should not have been issued in a cavalier manner.