Citation: M/s Ansari Construction v. Additional Commissioner, CGST, Writ Tax No. 626 of 2020, Allahabad HC
In a recent case that came up before Hon’ble Allahabad High Court, the Petitioner proprietorship firm’s certificate of registration had been cancelled by an ex-parte order on the ground that returns for six consecutive months were not filed. The Petitioner’s application for revocation of cancellation of registration was also rejected on the ground that details of payment of interest and challan/ DRC-03 was not produced. The SCN that was issued for rejecting the Application was simply vague as it did not contain any reason on which the Petitioner could show cause, and simply stated: “Others (Please specify).” as reason. Aggrieved, the firm preferred appeal before the Appellate Authority which was dismissed inter-alia on the ground that claims made cannot be verified at this stage. Thereafter, the Petitioner moved the High Court.
Hon’ble Allahabad High Court took strong exception to the vaguely worded Show Cause Notice and to the order passed by the Appellate Authority and criticized the callous attitude of the Department which has resulted in causing harassment to the assessee.
The Court framed three issues and gave its findings on each of them which are discussed hereunder:
Issue: Vague SCN and non-verification of facts
The issue primarily was that certificate of registration of the Petitioner was cancelled on ground that returns for six consecutive months were not filed. The Petitioner thereafter filed revocation application stating that all pending returns have been filed and late fees has been paid. However, the Department issued a show cause notice without stating grounds for show cause notice. The application was rejected on the ground that details of interest amount or details of challan/ DRC-03 were not provided and also on ground that these were mere assertions.
Hon’ble Court observed that once the Petitioner had filed a statement stating that all requisite returns have been filed and dues are cleared, it was incumbent upon the Department to have verified the correctness of averments made. It was further observed:
I am sorry to observe that the Department miserably failed to verify the facts from their own records and proceeded to issue a show cause notice which is contained in Annexure 4 to the writ petition and quoted herein above. The manner in which the show cause notice has been issued is wholly unacceptable as it does not record any shortcoming on the part of the assessee. It is not conceivable as to what was required in the show cause notice.
The Court’s observation regarding rejection of application for revocation are also notable. To quote:
The order dated 30.1.2020 passed by the Assistant Commissioner rejecting the application of the petitioner is wholly arbitrary and demonstrates the lack of legally trained mind as there appears to be no effort to verify the correctness of the assertions made by the petitioner at the end of the Department.
Issue: Appellate Authority cannot verify facts at appellate stage
Court held as under:
I am sorry to record that the appellate authority has also committed the same manifest arbitrariness in deciding the appeal, the recording of the reason that facts cannot be verified at the appellate level is wholly arbitrary and militates against the whole purpose of statutory appeal under an enactment.
Issue: Contradiction in stand of Department.
On one hand, it was the contention of Department before Appellate Authority that no documents were uploaded which could prove that returns have been filed.
On the other hand, the Department placed on record instructions before the High Court that stated that returns have been filed upto November 2019 and that there are no dues pending towards tax, late fee, interest upto November 2019.
Since the Department now accepted the fact that returns have been filed, the Court observed that it was surprising as to why the instructions could not be obtained or given at the level of adjudication or appellate level. The Court also stated that the callous attitude of the Department has resulted in the assessee being harassed by approaching one forum after the other and wasting his considerable financial resources as well as time.
The Court ultimately revoked the order cancelling registration from the date of filing of the application before the Respondent No. 2.