No Auto Cancellation of GST Registration of Buyer for fraud committed by selling
According to the Rule 21 of the OGST Rules reads as under:
GST Registration to be cancelled in in Following given cases. GST registration issued to a person is liable to be cancelled, if the said gst registration person,
(a) does not conduct any business from the declared place of business: or
(b) issues invoice or bill without supply of goods or services in violation of the provisions of the Act, or the rules made thereunder; or
(c) violates the provisions of Section 171 of the Act or the rules made thereunder.”
Buyer’s registration cannot be cancelled for fraud committed by seller :
- Honorable Orissa High Court rules that “for fraud committed by the selling, which resulted in cancellation of a selling GST registration, It is to be noted that GST registration cannot be an automatic cancellation of the registration of the purchasing dealer.
- Above High Court state that to attribute fraud to the buyer, the onus is on GST Dept to show that somehow the buyer & seller acted in connivance to defraud the revenue and with a high threshold of transactions.
- This Honorable Orissa High Court decision can be cited in scenarios where the authorities are initiating proceedings against Bonafede ‘buyers’ if ‘sellers’ are found non-compliant.
- The Case Laws can be refer from above Honorable Orissa High Court:
- Apex Court in Commissioner of Trade and Taxes Delhi Vs Arise India Limited
- Madras HC in M/S. D.Y. Beathel Enterprises versus The State Tax Officer (Data Cell), (Investigation wing)
- GST Dept was unable to establish that the petitioner purposefully claimed Input tax credit with respect of transactions with an firm knowing that such an entity was not exist.
- Honorable Orissa High Court delivered below precedence based on above:
- Impugned order of the LPO and appellate order are liable to be set aside.
- GST Dept is directed to GST registration restore of the Petitioner & he will be permitted to file all the GST return compliance which he is can not able to submit on account of the cancellation of the GST registration.
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