High Court overturns registration cancellation due to lack of hearing, emphasizes statutory requirements

The High Court set aside the order of cancellation of registration under Section 29(2) of the Karnataka Goods and Services Tax Act, 2017, as the petitioner was not granted a proper opportunity of being heard before the cancellation. The matter was remitted back to the respondent for reconsideration, with the petitioner directed to appear without further notice. The court emphasized the statutory requirement of providing a personal hearing before cancellation, which was not met in this case. Relief was granted to the petitioner due to the failure to adhere to the legal requirement of granting a personal hearing.

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Issues:
Challenge to cancellation of registration under Section 29(2) of KGST Act without opportunity of being heard.

Analysis:
The petitioner challenged the order of cancellation of registration under Section 29(2) of the Karnataka Goods and Services Tax Act, 2017 (KGST Act) on the grounds of not being granted an opportunity of being heard. The petitioner argued that the proviso to Section 29(2) mandates that the proper officer must provide a chance for a personal hearing before cancelling registration. The petitioner pointed out that despite a Show Cause Notice being issued, no date for personal hearing was fixed, which is a requirement under the law. The petitioner emphasized that merely considering the reply and submissions of the petitioner is not sufficient; the statutory requirement of a personal hearing must be met. The counsel for the revenue did not dispute the petitioner's claim of not being heard during the proceedings related to the cancellation of registration.

The respondent contended that the order of cancellation stated that the petitioner's reply and submissions were examined during the hearing. However, it was noted that this alone does not prove the petitioner's presence during the proceedings leading to the cancellation of registration. The court emphasized the statutory mandate under the proviso to Section 29(2) of the KGST Act, which requires that the person must be given an opportunity of being heard before cancellation. In the absence of any evidence supporting the petitioner's presence during the proceedings, the court held that the cancellation order was not in compliance with the legal requirement of providing an opportunity for a personal hearing.

In the final judgment, the High Court set aside the order of cancellation of registration and remitted the matter back to respondent No.2 for reconsideration of the proceedings related to the cancellation. The petitioner was directed to appear before respondent No.2 without any further notice on a specified date. The writ petition was disposed of, granting relief to the petitioner based on the failure to provide an opportunity for a personal hearing as required by law.

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