Prakash Kumar Nayak v. Commissioner, CT & GST & Another

Introduction

This judgment is a significant decision on cancellation of GST registration under Section 29(2)(e) on the allegation that registration was obtained by fraud, wilful misstatement or suppression of facts. The Orissa High Court held that such a serious allegation cannot be sustained merely on the basis of a vague show cause notice and a mechanical cancellation order.

The Court emphasized that fraud, wilful misstatement and suppression of facts are serious allegations requiring specific pleadings, supporting evidence and reasoned findings. In the present case, the authorities neither supplied the adverse post-registration visit report forming the basis of the proceedings nor explained how the petitioner had obtained registration fraudulently. Consequently, both the Show Cause Notice and the cancellation order were held to be violative of the principles of natural justice and were quashed. However, the Court balanced the interests of revenue by directing restoration of registration subject to payment of tax, interest and filing of pending returns within two weeks.