The Department has failed to show that the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence. Accordingly, the Department is directed to restore the Petitioner’s registration.
Section 29, 30 of the CGST Act, 2017— Registration — The petitioner challenged the order rejecting the Petitioner’s application for revocation of cancellation of his registration on 7th January, 2021 under Section 30(2) of the Act. The petitioner appealed against the said order, which was also rejected. The petitioner counsel submitted that for the fraud committed by the selling dealer, which resulted in cancellation of a selling dealer’s registration, there cannot be an automatic cancellation of the registration of the purchasing dealer under rule 21 of the Rules, 2017. The court observed that in such circumstances, as a purchasing dealer, the Department would have to satisfy a high threshold of showing that the purchaser indulged in the transactions with the full knowledge that the selling dealer was non-existent. The Department would have to show that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. This threshold has not been made in the present case.
Held that:- The Hon’ble High Court set aside the impugned order rejecting the Petitioner’s application for revocation of its cancellation of registration and the impugned appellate order dated 5th April, 2021 rejecting the Petitioner’s appeal.
The Department has failed to show that the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the transactions with an entity knowing that such an entity was not in existence. Accordingly, the Department is directed to restore the Petitioner’s registration.
Section 29, 30 of the CGST Act, 2017— Registration — The petitioner challenged the order rejecting the Petitioner’s application for revocation of cancellation of his registration on 7th January, 2021 under Section 30(2) of the Act. The petitioner appealed against the said order, which was also rejected. The petitioner counsel submitted that for the fraud committed by the selling dealer, which resulted in cancellation of a selling dealer’s registration, there cannot be an automatic cancellation of the registration of the purchasing dealer under rule 21 of the Rules, 2017. The court observed that in such circumstances, as a purchasing dealer, the Department would have to satisfy a high threshold of showing that the purchaser indulged in the transactions with the full knowledge that the selling dealer was non-existent. The Department would have to show that somehow the purchasing dealer and selling dealer acted in connivance to defraud the revenue. This threshold has not been made in the present case.
Held that:- The Hon’ble High Court set aside the impugned order rejecting the Petitioner’s application for revocation of its cancellation of registration and the impugned appellate order dated 5th April, 2021 rejecting the Petitioner’s appeal.