Kerala High Court on Fraudulent GST Registration Amendments: Original Registration vs. Amendments
The Kerala High Court in N. Suveendran Vs State Tax Officer examined whether a GST registration itself can be cancelled when fraud is detected only at the stage of amendment and not at the time of initial registration. The Court’s decision draws a clear distinction between fraud in obtaining registration under Section 29(2) of the CGST Act, 2017 and fraud in securing an amendment to an already valid registration.
This ruling is significant for GST authorities and assessees alike, particularly in cases where disputes arise regarding change of business premises based on allegedly fabricated ownership or consent documents.
Factual Background
Initial Registration and Subsequent Amendment Request
The 3rd respondent in the case was already a registered person under the GST regime. At a later stage, he submitted an application seeking amendment of his existing GST registration, particularly in relation to the place of business.
- The amendment application relied upon two documents, referred to as Exts.P3 and P4.
- These documents were produced to show that the 3rd respondent’s father and brother had permitted him to use a specific premises for carrying on his business activities.
Discovery of Alleged Fraud in Documents
On scrutiny, the State Tax Officer concluded that Exts.P3 and P4 were fraudulent documents, primarily because:
- The documents bore a date subsequent to the death of the 3rd respondent’s father.
- Consequently, the State Tax Officer took the view that the permission or consent reflected in these documents could not have been validly given in the manner claimed.
Relying on this conclusion, the State Tax Officer issued Ext.P6 order, which did not merely reject the amendment request but went a step further and:
- Cancelled the original GST registration itself.
- The order invoked
Section 29(2)(e)of the CGST Act, 2017 as the basis for cancellation.
First Appeal before the Appellate Authority
Challenge to the Cancellation Order
The 3rd respondent carried the matter in appeal before the First Appellate Authority, challenging the legality of Ext.P6.
The Appellate Authority, through Ext.P11 order, allowed the appeal, holding inter alia:
- The State Tax Officer did not have the power, in the circumstances presented, to cancel the registration in this manner under
Section 29(2)of the CGST Act, 2017. - The cancellation of the registration, as well as the approach taken to the amendment, was not sustainable.
- The parties were directed to pursue other appropriate remedies, particularly in relation to their inter se disputes on rights over the property.
Writ Petition before the Single Judge
Partial Interference with Appellate Order
Aggrieved by the Appellate Authority’s decision, the appellant approached the Kerala High Court by way of a writ petition. The learned Single Judge adopted a middle path:
Amendments Cancelled
- The Single Judge set aside the amendments to the GST registration that had been obtained on the basis of Exts.P3 and P4.
- The court effectively held that these documents, and hence the amendments founded on them, could not be sustained.
Original Registration Retained
- The original GST registration of the 3rd respondent was not disturbed.
- The assessee was permitted to apply afresh for amendment of registration in accordance with law, if and when he obtained valid supporting documents or appropriate civil court orders.
The Single Judge thus differentiated between fraud or invalidity at the registration stage and at the amendment stage, and tailored relief accordingly.
Intra-Court Appeal before the Division Bench
Appellant’s Contention
The appellant, dissatisfied with the Single Judge’s decision to let the original registration stand, preferred an appeal before the Division Bench of the Kerala High Court.
The core argument advanced was: