Cancellation Of GST Registration Announces Economic Death Of Business Entity; Reasoned Order Needed: Allahabad High Court

The Allahabad High Court has observed that the cancellation of GST registration of a business entity leads to it economic death and it is sine qua non that a reasoned order is passed by the authority for cancelling the registration of an assesee. The bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla observed: “We are equally mindful that the order of cancellation of registration causes deep adverse impact on the conduct of business of any registered individual. Neither ...

GST Act | S.130 Cannot Be Invoked For Excess Stock Found During Survey; Action Must Proceed U/S 73/74: Allahabad High Court

The Allahabad High Court held that Section 130 of the Goods and Service Tax Act, 2017 could not be invoked where excess stock was found at the time of survey While dealing with a case regarding a search conducted under the GST Act, where upon finding discrepancies, proceedings had been initiated against the petitioner under S. 130 of the Act, Justice Piyush Agarwal held “A specific provision has been contemplated that if the goods are not recorded in the books of account, then the...

No Authority Under GST Act To Reserve Judgement & Deliver It Later Without Issuing Notice To Assessee: Allahabad High Court

The Allahabad High Court has held that nothing under the Goods and Service Tax Act, 2017 the relevant rules, and notifications, allows the authorities to reserve judgements on the fixed date and pass them later, especially without informing the assessee. The petitioner was issued a show cause notice on 17.02.2022. The petitioner submitted a reply but the respondent passed an order levying tax and penalty, without providing the relevant materials or an opportunity of hearing. ...

Cannot Cancel GST Registration Without Passing Reasoned Speaking Order: Allahabad High Court

The Allahabad High Court has held that while cancelling GST registrations, authorities must pass reasoned and speaking orders. It held that doing otherwise would render the order unsustainable in the eyes of the law. “Once the impugned cancellation order has been passed without putting any proper notice or affording any opportunity of hearing to the petitioner, the same itself is in violation of principles of natural justice,” held Justice Piyush Agarwal. The petitioner, a real...

UPGST Act | Confiscation Notice U/S 130 Cannot Be Issued For Mere Violation Of Record-Maintenance Requirements U/S 35: Allahabad HC

Recently, the Allahabad High Court reiterated that notices under Section 130 of the Uttar Pradesh Goods and Service Tax Act 2017 for confiscation and levy of penalty, could not be issued for alleged violation of maintenance of accounts and records as required under Section 35 of the Act. It was held that such notices under Section 130 could only be issued once the department had determined the liability of tax under Sections 73 or 74 of the Act. The Court relied on the judgement of...

Suspension Of State Tax Officer For Delayed Report Unjustified When Authority Failed To Act In GST Fraud Case: Allahabad High Court

The Allahabad High Court has held that where loss is caused to the State, a State Tax Officer may not be suspended for mere delay in submitting a report. Justice Vikas Budhwar held that this would be especially impermissible in a case where the authority to act on the report in time chooses not to do so.He held that, despite the fact that the petitioner submitted the report with delay, the authority to take action was the Assistant Commissioner. It was held that the petitioner could not be...

GST Authorities Cannot Assume Jurisdiction For Passing Adverse Orders For Work Concluded Under VAT Regime: Allahabad High Court

The Allahabad High Court has held that GST Authorities cannot claim jurisdiction for levying tax, penalty, and interest on work that was concluded prior to the implementation of the GST Act. Notices were issued to the petitioner, a work contractor, for the Financial Year 2018-19 under the GST Act. The petitioner was unable to reply to the notices in time. Consequently, an ex-parte order was passed, levying tax, penalty and interest on him. Aggrieved, he sought relief before the High...

Predominant Purpose Of Industry Is Essential For Determining Bracket Of Cess Taxation: Allahabad High Court

The Lucknow Bench of the Allahabad High Court has held that in determining cess for an industry, the assessing authority must consider the predominant purpose of the industry. “In this case where the question is whether a particular industry is an industry as covered in Schedule I of the Act, it has to be judged normally by what that industry produces mainly. Every industry carries out multifarious activities to reach its goal through various multifarious methods. Whether a particular...

Income Tax Appellate Tribunal Cannot Pass Ex-Parte Orders Without Recording Reasons For Denying Adjournment: Allahabad High Court

While hearing an appeal under S. 260A of the Income Tax Act, the Allahabad High Court has held that the Income Tax Appellate Tribunal cannot reject adjournment applications and pass ex-parte orders without recording reasons for such dismissal. It was held that if the Tribunal was allowed to do such a thing, it would hamper the right of the parties to a reasonable opportunity of hearing. “While inordinate delays in judicial decision making is not healthy and expeditious disposal of the...

UPGST Act | Lien Cannot Be Created On Assessee's Bank Account After Over A Year Has Passed From Payment Of Tax: Allahabad High Court

Recently, the Lucknow Bench of the Allahabad High Court has held that under the UPGST Act, a lien cannot be created on the assessee's bank account an year subsequent to the payment of taxes. Section 62(2) of the UPGST Act provides that where a registered person submits a valid return within 60 days of the service of the order under Section 62(1), the said assessment order would be considered to have been withdrawn; only the liability for payment of interest would persist. The ...

UPGST Rules | Reason To Believe Must Be Reduced In Writing While Operating Under Rule 86A: Allahabad High Court

The Allahabad High Court has held that while acting under Rule 86A of the UPGST Rules, authorities must record 'reason to believe' in 'writing'. It held that not doing so would be contrary to the purpose of the Rule. “It may not forgotten, granting ITC and maintaining its chain is the soul of a successful GST regime. Therefore, any doubt or suspicion alone may not lead an action by the authorities to block the ITC of the assessee and disrupt the entire value addition chain and...

CENVAT Rules Cannot Apply Retrospectively To Concluded MODVAT Proceedings: Allahabad High Court

Recently, the Allahabad High Court has held that where proceedings under the MODVAT (Modified Value Added Tax) Scheme had concluded prior to the introduction of the CENVAT (Central Value Added Tax) Rules, it would not be open to the revenue department to issue fresh notices against the assessee under the new scheme. The MODVAT scheme, allowing manufacturers a tax credit on input duties, was replaced on 01.07.2001 by the CENVAT scheme. This was later codified as the CENVAT Credit Rules...