Failure to disclose New GST Registration does not Justify GST Appeal Dismissal: Allahabad HC [Read Order]

The Allahabad High Court in a recent case observed that the appellant’s failure to disclose new GST registration did not justify the lower authority’s action of dismissing the appellant’s GST appeal, as this information was observed to be immaterial to the central issue addressed in the petition, which was whether the cancellation of the appellant’s original GST registration was valid or not. The appellant, M/S Genius Ortho Industries, is a company engaged in the business of orthopedic goods. The appellant’s GST registration was canceled on December 19, 2022, by the Superintendent, Ghaziabad, Sector-13. Aggrieved by the cancellation, the company appealed the order to the Joint Commissioner (Appeals) Central GST in Meerut. However, this appeal was dismissed on February 27, 2023, leaving the appellant without recourse under the internal departmental framework. Get a Copy of GST Manual (Acts & Rules), Click here The appellant subsequently filed a writ petition on April 16, 2023, before the Allahabad High Court, challenging the cancellation of its GST registration and the appellate order. This writ petition was the first legal action taken by the appellant outside the administrative appeal process. When the matter came up before the Single Judge on February 22, 2024, the Court noted that a further verification of the appellant's premises by the authorities was necessary. The Court directed the GST authorities to conduct a verification visit to the appellant's premises on February 23, 2024, at 11 AM. Importantly, the Court stated that no further communication regarding the visit was required to be made to the appellant, and the matter was adjourned to February 29, 2024, for further hearings. On the adjourned date, the respondent's/ revenue’s counsel brought to the Court's attention that the appellant had failed to disclose a crucial fact. After the cancellation of its original GST registration, the appellant had obtained a new GST registration on March 5, 2023, which had not been revealed in the writ petition. This non-disclosure led the respondents to allege that the appellant had suppressed a material fact. Get a Copy of GST Manual (Acts & Rules), Click here The Single Judge agreed with the respondent's argument that the non-disclosure of the new registration was significant. According to the Judge, by withholding this information, the appellant had misled the Court, resulting in the unnecessary direction for the verification of the premises. Citing the case of Bhriguram De v. State of West Bengal (2018 SCC OnLine Cal 8141), the Court dismissed the writ petition on the grounds of suppression of material facts. Dissatisfied with the order of the Single Judge, the appellant filed a special appeal. Before the Court, the appellant's counsel argued that the Single Judge erred in dismissing the writ petition solely on the ground of suppression of facts. According to the appellant, the fact of obtaining a new GST registration was not material to the core issue at hand, which was the legality of the cancellation of the original registration. The counsel further contended that the Single Judge had not explained how the non-disclosure of the new registration was relevant to the determination of the writ petition. Get a Copy of GST Manual (Acts & Rules), Click here In support of their argument, the appellant relied on the Supreme Court’s judgment in Arunima Baruah v. Union of India (2007) 6 SCC 120, which established that suppression of facts must be of material facts to justify the Court’s refusal to exercise its discretionary jurisdiction. A material fact, according to the Court in Arunima Baruah, is one that is essential for the determination of the case or the grant of relief.Merely failing to disclose an immaterial fact should not lead to the dismissal of a petition. The appellant also referenced The Commissioner, Central Excise and Customs v. Reliance Industries Limited, where the Supreme Court reaffirmed the principle that suppression must be of facts that are critical to the resolution of the legal issue. On the other side, the respondent’s counsel argued that the appellant had suppressed an important fact by not disclosing that it had obtained a fresh GST registration on March 5, 2023. Get a Copy of GST Manual (Acts & Rules), Click here According to the respondent, this new registration undermined the appellant’s challenge to the original cancellation. Since the appellant was already operating under a new registration, it was contended that there was no basis for pursuing the writ petition, and therefore, the non-disclosure was indeed material. The respondents maintained that the Single Judge was justified in dismissing the writ petition for this reason. Additionally, the respondent argued that the appellant did not have a case on merits and that the writ petition was rightly dismissed. After hearing the arguments from both sides, the Division Bench, comprising Chief Justice Arun Bhansali and Justice Vikas Budhwar, examined the legal principles surrounding the concept of suppression of material facts. Get a Copy of GST Manual (Acts & Rules), Click here Referring to the Supreme Court's judgment in Arunima Baruah, the Bench observed that the suppression must be of facts material to the determination of the case. The Court stressed that for the dismissal of a petition based on suppression, it must be shown that the fact suppressed was crucial to the resolution of the legal dispute at hand. In this case, the Division Bench found that while the new registration obtained by the appellant was relevant to the direction for premises verification, it was not material to the core issue of whether the cancellation of the original registration was valid. It was inferred that the Single Judge had failed to demonstrate how the suppression of the new registration impacted the determination of the dispute or the maintainability of the petition. The Division Bench observed that although the failure to disclose the new registration may have misled the Court regarding the need for premises verification, this alone did not justify dismissing the writ petition. The Court concluded that the non-disclosure was not material enough to affect the ultimate resolution of the case. Consequently, the order passed by the Single Judge could not be sustained. In light of these findings, the Division Bench allowed the appeal, set aside the order of the learned Single Judge, and remanded the matter back to the Single Judge for reconsideration on merits. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates