Yes, the Honorable High Court of Calcutta in the case of Limton Metals Ltd. v. Superintendent [W.P.A. NO. 11277 OF 2024] dated 25 June 2024 dismissed the writ petition challenging orders for cancellation of registration. The petitioner argued that the notice did not comply with section 29 provisions, as it did not specify the reasons for the cancellation and the notice mentioned “Others” under the reasons column, which the petitioner claimed was insufficient disclosure. The Honorable Court observed that the petitioners have advanced arguments that the show cause notice did not identify and/or specify the reasons, it would however, transpire from the show cause, that it referred to certain supportive documents which that were also made available to the petitioner along with the aforesaid show cause notice indicating that the petitioner was suspected of being a fake entity used to pass on irregular Input Tax Credit (ITC) without actual supply. However, mere disclosure of reasons does not satisfy the requirement of the provisions contained in Rule 25 of the CGST Rules, 2017. However since the petitioner is reluctant to cooperate with further inspection, it raises serious doubts regarding the bona fide of the petitioners.
The Honorable Court stated that although the procedure adopted by the respondents to cancel the petitioner’s registration under the said Act may not be strictly as per the procedure laid down, however, the same cannot be said to be per se illegal or without any basis. The writ petition was dismissed, as the court concluded that the petitioner had been informed of the reasons for the cancellation.
Author’s Comments
It is common to find that demand in a notice is arbitrary. It is important to note that allegations in support of a demand may lack some essential ingredients and that may offer grounds to assail the notice on the ground of ‘arbitrariness’. Now section 160(1) can be relied upon in adjudication to overcome this allegation. Not everything that is vague or difficult to comprehend can be called as arbitrary. Arbitrariness demands a certain minimum level of understanding of the subject before capable of declaring something to be arbitrary. A Defense that relies upon arbitrariness bears the burden to demonstrate the exact level of the unintelligibility of the allegation in the notice that goes to the root of the demand and destroys it completely.
Arbitrariness must be advanced as a defense with great circumspection because faced with arbitrariness, there remains nothing more to be said by way of defense and arbitrariness ends any further defense. Other ground in addition to arbitrariness is a contradiction-of-sorts.
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