The Gujarat High Court reprimanded the Commissioner of CGST for issuing a Goods and Services Tax (GST) notice with the same-day date of hearing. The court observed that the department is not following the directions issued by the court in the past and that this is resulting in unnecessary litigation.
The High Court referred to its decision in AGGARWAL DYEING AND PRINTING WORKS vs STATE OF GUJARAT [2022 TAXSCAN (HC) 281].
The court was hearing a petition filed by a dealer whose GST registration was canceled by the department. The dealer argued that the notice issued to him was cryptic and did not contain any reasons for the cancellation of his registration. The court agreed with the dealer and observed that the department is in the habit of issuing notices without giving the dealer a proper opportunity to be heard.
Frustrated with cryptic GST cancellation notices, the Gujarat High Court demanded in-person explanations from state and central department officials by being present in the court the next day.
The court directed the department to develop and upload appropriate software on the portal which would enable it to feed all the necessary information in the show cause notice as well as in the final order of cancellation of registration. The court also directed the department to issue physical notices to the dealers by registered post in case the software is not yet developed.
The court further observed that the department is often relying on evidence in the final order of cancellation of registration which was not brought to the notice of the dealer in the show cause notice. The court held that the dealer should be given an opportunity to respond to any evidence that the department intends to rely on before the final order is passed.
During the hearing, Sukhjit Kumar, Commissioner of the Bhavnagar Central Goods and Services Tax unit, stood before Justice Bhargav Karia and Justice Niral Mehta on Thursday, facing the strong warning from the bench.
The court finally directed the department to withdraw all the pending notices which were issued in violation of its directions and to issue fresh notices in accordance with the law. The court also directed the Principal Commissioner of CGST to be present in court the next day to explain why the department is not following its directions.
In Aggarwal Dyeing, Justice J. B. Pardiwala had observed that “the GSTN i.e. the Goods and Service Tax Network, is one of the most significant achievements in the history of Indian Indirect Taxation. Since July, 2017, the implementation of GST in India is due to the GSTN. However, still there are many issues which the GSTN needs to address itself. There is always a scope of improvement in the functioning and technical performance of the GSTN. Due compliance of the laws of GST involves a lot of technology and not just the law. Using the right technology for the right process in an efficient manner will definitely reduce the hardships and difficulties, which the small dealers may have to face. It is extremely important as on date to ensure that the technical glitches or bottlenecks in the portal are attended to at the earliest and taken care of.”
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