Case Alert on Taxation

The Hon’ble High Court of Delhi directed that GST registration of assessee was to be treated as cancelled with effect from date from which assesse sought cancellation of GST registration as proceedings under DRC-01 were independent of proceedings for cancellation of GST registration and could continue despite cancellation of GST registration. 

In the case of Chetan Garg v. Sanjeev Sachdeva and Ravinder Dudeja, JJ.

W.P (C ) No. 4509 of 2024 CM APPL. No. 18423 of 2024 (April 05, 2024)

In the present case, Assessee filed an application for cancellation of GST registration on the ground that assesse did not intend to carry on business under said GST number. On the first instance application of assesse for cancellation of registration was rejected. Assessee again applied for cancellation and filed instant application seeking direction to respondents to cancel GST registration of assessee. In response to it, it was submitted by the department that certain show cause notices were issued to assessee for financial years 2018-19 to 2023-24 but proceedings are still pending.

Held that proceedings under DRC-01 are independent of the proceedings for cancellation of GST Registration and can continue despite cancellation of GST registration. The recovery of any amount found due can always be made irrespective of the status of the registration. Thus, merely pendency of the DRC-01 cannot be a ground to decline the request of the tax-payer for cancellation of the GST Registration.

Therefore, GST registration of assessee was to be treated as cancelled with effect from date from which assessee sought cancellation of GST registration and it would be without prejudice to the proceedings initiated by the respondents by issuance of DRC-01 for the financial year 2018-19 to 2023-24.

The Hon’ble High Court of Allahabad directed that calculation of stock by appellate authority on basis of an estimate was without any basis in law, thus entire procedure followed by authorities indicates not only a lackadaisical approach but also showcases incompetence and inefficiency of authorities, therefore order related to confiscation and penalty related to additional stock was to be set aside.

In the case of Eco Plus Steels (P.) Ltd. v. State of U.P. Shekhar B. Saraf, J. Writ Tax Nos. 916 & 1600 of 2022, (April 12, 2024)

In the present case, assessee challenged orders passed by Assessing Officer and Appellate Authority regarding confiscation and penalty related to additional stock. The aforesaid orders have been passed in relation to confiscation under Section 130 of the Act and levy of penalty under Section 122 of the Act. Stock was not weighed or counted, specifically when same could have very well been done in premises of the assesse.

It was held that calculation of stock by Appellate Authority on basis of an estimate was without any basis in law. It was done on estimation basis. In view of judicial precedents, confiscation based solely on eye estimation was not permissible under law. The Entire procedure followed by authorities indicates not only a lackadaisical approach but also showcases incompetence and inefficiency of authorities that had carried out survey in a careless manner and thereafter issued show cause notice and passed order of confiscation and penalty belatedly

Therefore, Burden of proof for penalty and confiscation lies on revenue and estimation could not be a substitute for physical verification and impugned orders were to be quashed and set aside