the essay of 3 September 2025 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=utf-8"> </head> <body bgcolor="#FFFFFF"> <p><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">SEPTEMBER 03, 2025</font></strong></p> <p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong> Remand by Appellate Authority - No Second Innings</strong></font></p> <p align="center"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><u>By Vijay Kumar</u></font></strong></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>ON</strong> 05.09.2024, some GST officers carried out a formal inquiry on the business premises of Kanha Shree Steels. Thereafter, on 14.09.2024, a show cause notice was issued to them for cancellation of registration, to which they submitted their reply. Then, by order dated 26.09.2024, the registration of the taxpayer, Kanha Shree Steels was cancelled.</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">They moved an application for revocation of the cancellation of registration, which was rejected by order dated 31.12.2024. Against the order dated 31.12.2024, they preferred an appeal before the ADDITIONAL COMMISSIONER CGST (APPEALS), which was allowed vide order dated 28.03.2025, subject to verification of facts. Thereafter, the Assistant/ Deputy Commissioner informed the petitioner vide impugned order dated 01.05.2025 that the cancellation of the registration may not be revoked in absence of fulfilment of compliance laid down in the appellate order dated 28.03.2025.</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The ADDITIONAL COMMISSIONER CGST (APPEALS), in his order held:</font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">5.7. I find that it is trite law that a show cause notice must clearly indicate the reasons in detail for proposing the adverse action in order to enable the noticee to respond to the same. Clearly, the impugned show cause notice does not meet this standard. Further, a show cause notice must set out the allegation in detail. Thus, I find that the impugned show cause notice and order, being without reasons in detail, is cryptic and deserves to be quashed and set aside. In this regard, I also find support from the pronouncement made in following cases:-</font></p><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">i. <em><strong>VIBHU BAKHRU AND AMIT MAHAJAN, JJ. CUTHBERT OCEANS LLP VERSUS SUPERINTENDENT OF CGST, ROHINI [W.P. (C) NO. 10421 OF 2023 AND C.M. APPL. NO. 40335 OF 2023, DECIDED ON 8-8-2023]</strong></em>:</font></p><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">Held: Superintendent of CGST issued impugned show cause notice proposing to cancel petitioner's registration on ground that registration was obtained by means of fraud, wilful mis-statement or suppression of facts. Apart from this reason, no other reason or particulars was disclosed. Petitioner filed a response belatedly after respondent had passed impugned order cancelling petitioner's GST registration retrospectively Petitioner had referred to transactions carried out by him and had quizzed respondent as to what was fraud in that transaction.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">HELD: This was a clear case of violation of principles of natural justice - Instant writ petition was to be entertained and impugned show cause notice as well as impugned order were to be set aside.</font></p></blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">ii. <em>OTTIMO VISUALS Versus COMMISSIONER OF GST, DELHI WEST [W.P. (C) No. 6991 of 2023, decided on 16-08-2023]</em> = <a href="https://taxindiaonline.com/searchcaselaw/details?id=177692&type=caselaw&keyword=null" target="_blank"> <strong> <em>2023-TIOL-1076-HC-DEL-GST</em></strong></a>:</font></p><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">Held: It is trite law that a show cause notice must clearly indicate the reasons for proposing the adverse action in order to enable the noticee to respond to the same.</font></p></blockquote></blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#acdffb">5.9 In light of the foregoing facts, I hold that the cancellation of registration of the appellant is liable to be revoked subject to the verification by the jurisdictional Assistant/Deputy Commissioner of the facts and fulfilment of the conditions by the appellants.</font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Thus, the Additional Commissioner as an appellate authority found that show cause notice and order, were without reasons in detail, and was cryptic. And so, he quashed them, but - but, wait - it was subject to verification by the jurisdictional Assistant/Deputy Commissioner of the facts and fulfilment of the conditions by the appellants. What facts? What conditions? Was the jurisdictional Assistant/Deputy Commissioner free to confirm the cancellation after verification and non-fulfilment, by the appellant taxpayer?</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The taxpayer approached the Allahabad High Court in writ petition against the impugned orders dated 28.03.2025 and 01.05.2025 to the extent wherein the matter was remanded to the Assistant/Deputy Commissioner for verification of facts relating to the petitioner.</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The petitioner submitted: -</font></p> <div><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">1. that the appeal of the petitioner was allowed holding that the show cause notice and the order cancelling the registration are not meeting the standard, but while allowing the appeal, a fresh direction was issued to the Assistant/Deputy Commissioner for verification of facts relating to the petitioner and on fulfilment of the conditions by the petitioner, the registration may be revoked.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">2. that the appellate authority has no power to remand the matter or give direction as given in the impugned order.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">3. Once the authority has come to the conclusion that the show cause notice for cancellation of registration and the order of cancellation are cryptic and no reason was assigned, a second inning cannot be given to the State authorities.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">4.</font> <font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">that once the notice and the order were quashed and the same were never challenged by the State authority, further action cancelling the registration cannot be taken. </font></p></blockquote></div> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">In support of his submissions, he has placed reliance on the judgement of the Division Bench of the same High Court in <em>M/s P.N.C. Construction Company Limited Vs. State of U.P. & Others [2002 UPTC 262]</em>. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Counsel for the Revenue submitted: </font></p> <div><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">1. that the petitioner has failed to discharge its burden.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#c1dfe8">2. that while cancelling the registration of the petitioner, it was found that the petitioner was not conducting any business from the disclosed place. The said fact was also found on verification at the subsequent stage and therefore, the impugned orders have rightly been passed. </font></p></blockquote></div> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">After hearing the counsel for the parties, the Court has perused the record and observed: [Allahabad High Court Neutral Citation No. - 2025:AHC:140765]</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#ffff00"><strong> [<a href="https://taxindiaonline.com/caselaw/details?id=189312&type=caselaw">2025-TIOL-1416-HC-ALL-GST</a>]</strong> </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#d1d1e7">It is nobody's case that by the impugned order, the authority has come to the conclusion that neither show cause notice, nor the order specify the conditions as required or any reason in detail has been given. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#d1d1e7">Bare perusal of the aforesaid findings shows that the authority has come to the conclusion that without any reason in detail, cryptic order was passed. Once the authority has come to the conclusion that the order impugned in the appeal cannot be sustained, there was no justification for giving further direction. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#d1d1e7">Section 107 of the GST Act does not empower the appellate authority to pass an order giving a second inning to the Revenue. Sub-section (11) of section 107 of the GST Act, provides that Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but <strong>shall not refer the case back</strong> to the adjudicating authority that passed the said decision or order. </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The High Court ordered: </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#d1d1e7">In view of the above, part of the impugned order dated 28.03.2025 is set aside to the extent it remands the matter to the Assistant/Deputy Commissioner for verification of facts relating to the petitioner. Consequently, the impugned order dated 01.05.2025 is set aside. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#d1d1e7">It is further provided that the respondents shall be at liberty to act in accordance with law for taking fresh course of action, if available under the law.<br/>The writ petition succeeds and is allowed. </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Section 107(11) of the CGST Act clearly stipulates that: </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#dff3cb">(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but<font color="#ff0000"> shall not refer the case back </font>to the adjudicating authority that passed the said decision or order:</font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Thus, the Appellate Authority has no power to remand the case to the Original Authority. The law very clearly states that the Appellate Authority shall not refer the case back to the adjudicating authority. When the law is clear, ambiguity is a luxury no authority can afford.</font></p> <p align="justify"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2025/Jest.PNG" style="float:left; height:265px; width:292px"/></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">When the Law is so clear why did the learned Additional Commissioner (Appeals) refer the case back to the Adjudicating Authority? Is he not aware of this provision of law? Or he has a different interpretation? The Additional Commissioner (Appeals) could have simply quashed the orders of the Assistant Commissioner or he could have adjudicated the case but should not have referred it back to the Assistant Commissioner. Unlike Tribunals and higher courts, the Appellate Authority in GST does not have the power to remand and the learned Appellate Authority should have known this. The Appellate Authority in this case was very well aware of decided cases wherein High Courts have held that a show cause notice must clearly indicate the reasons for proposing the adverse action. And on this ground alone he quashed the Show Cause Notice but he blissfully ignored Section 107(11) which clearly bars referring the case back to the adjudicating authority. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The GST lifecycle, it seems, follows a grim rhythm: GST registration-easy to cancel, hard to revive, impossible to remand.</font></p> <p align="justify"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2025/Jest2.PNG" style="float:right; height:213px; width:298px"/></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">And what is the consequence of his action? The taxpayer was relegated to the mercy of the original adjudicating authority who had again confirmed his previous order and then the taxpayer would have been forced to appeal to the appellate Authority and litigation could have gone on forever - with his GST registration in cancelled mode! He wisely chose to go to the High Court which was aware of Section 107(11) of the CGST Act and quashed the remand by the Appellate Authority. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The High Court didn't just quash the order-it quashed the bureaucratic <em>déjà vu.</em> </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Cancelling a GST registration means throttling the taxpayer - he cannot do business and it is a big loss to the government too. If the taxpayer does some business, the State will get some revenue. By cancelling that registration, you are losing that Revenue. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This isn't just a procedural hiccup-it's an economic choke hold.<em>Justice delayed is business denied.</em></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The High Court said, <em>"No second inning to the Revenue"</em>, which means you cannot bat again after losing the match. </font></p> <p align="justify"><font color="#0000ff" face="Verdana, Arial, Helvetica, sans-serif" size="2">Remand not allowed. Confusion optional. </font></p> <p align="justify"><font color="#ff0000" face="Verdana, Arial, Helvetica, sans-serif" size="2">Until next week</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Comments/feedback welcome at <a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in</a> or 9848111243 (WhatsApp) </font></p> </body> </html>