2.10 Revocation of cancellation

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LIMITATIONS OF SCOPE

Para 2.3

2.2 ANATOMY OF A NOTICE

Procedure for registration also affects rights of taxpayers and where there are any administrative or quasi-judicial action that can bring adverse consequences, principles of natural justice (discussed later) must be followed even if no express provision is found in the law to do so. There are significant adverse consequences of non-registration (by rejection or application or cancellation of registration) that valid registration avails. Input tax credit is allowable to only to a ‘registered person’ but output tax may be demanded from any ‘taxable person’. Without registration, input tax credit cannot be claimed, e-waybill cannot be generated or issue tax invoice to collect GST from Customers, etc. Reference may be had to the decision of Uttarakhand High Court in Vinod Kumar v. CST (WP 1553/2021) where passionately speaking for the taxpayer, it was observed that: “So, if the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works. Such denial of registration of GST number, therefore, affects his right to livelihood. If he is denied his right to livelihood because of the fact that his GST Registration number has been cancelled, and that he has no remedy to appeal, then it shall be violative of Article 21 of the Constitution as right to livelihood springs from the right to life as enshrined in Article 21 of the Constitution of India.” Every application is assigned to Central or State (or UT) GST department for verification and grant of registration, concerned Proper Officer must discharge duties to prevent prejudice to Revenue while acting as a ‘trade facilitator’. Applicant is required to be ‘put at notice’ in the following situations in respect of registration: (a) Deficiencies in application for registration; (b) Proposal to suspend or cancel registration; and (c) Justification for revocation of suspended registration. Short point for consideration in these notices is to determine questions of fact that entail grant of registration by Proper Officer.

2.3 LIMITATIONS OF SCOPE

At the time of registration, it is nearly impossible to decisively show any prejudice to Revenue (by grant of registration) as business is yet to commence. Although experience under earlier laws points to certain misadventures by registered persons, but the role of Proper Officer under section 25 is not that of an investigator and such these cannot be sufficient reasons to reject taxpayer’s application for registration:

Para 2.4

NOTICES UNDER SECTIONS 25 & 29

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(a) Applicants are benami and are acting for some other persons; (b) Application is insufficient to clearly establish identity of Applicant and business premises; (c) Registration threshold was already crossed earlier, and application made is to overcome investigation as ‘unregistered person’; (d) Purpose of registration is to claim and transfer input tax credit; (e) Incorrect category used - regular, casual, non-resident or ISD; (f) Goods proposed to be dealt with are prone to evasion. With this in mind, requirement to issue notice is to allow Applicant an opportunity to satisfy Proper Officer of correctness, completeness and reliability of documents submitted in support of the assertions made in the application. There is no investigative work involved. Applicants’ reply is to be binary, not involving complex questions of law. But it is important to recognise that notices in proceedings from section 25 are as much a ‘due process’ of law as a notice involving ‘demand’ under other provisions. Given the limited purpose for which requirement to issue notice is mandated, it is important for Applicant to be able to understand and respond. Time limits prescribed in the ‘due process’ involved in these notices are short in view of these very limitations. Extensive investigative work is NOT involved and enquiry into pre-registration activities of Applicant is NOT permitted in law.

2.4 REJECTION OF APPLICATION

This is also a ‘decision or order’ made by the Proper Officer and for that reason, it is appealable even if it is unusual for an Applicant to pursue remedy in appeal than file a fresh application. In law, appeal against Order of Rejection is permitted under section 107(1) which demands that the grounds on which application is rejected be open for consideration by Appellate Authority. As any other proceeding involving application of mind to reach a finding on facts (or law), Order of Rejection in REG5 must be a Speaking Order (discussed later). It must state the reasons for the finding that application merits rejection, duly supported by documents or response from Applicant, which brings out the insufficiency of documentations required to establish identity or location of establishment and that of authorized persons. Extensive enquiry into correctness of aggregate turnover, classification and forecast of turnover and nature of supplies are not germane at this stage. Rejection must be confined to the objective of application for registration. Often it is reported that applications are being rejected due to doubts about bona fides of the Applicant. It would be remarkable that financial background or level of skill to engage in business or such other criteria are given consideration to reject application. Short point for consideration in this process