2022 (9) TMI 1551 - HC - GST

GST Registration Cancellation Voided: Tax Authorities Must Provide Fair Hearing and Follow Proper Procedural Protocols

HC quashed GST registration cancellation orders against a passenger transportation firm. The court found procedural defects in the cancellation process ... Cancellation of GST Registration of petitioner - non-filing of returns for a continuous period of six months - HELD THAT:- It would be in the interest of justice to remand the matter back to respondent No. 1 to reconsider the entire matter regarding cancellation of registration as cancellation of GST registration would have an adverse Impact on the petitioner restraining him from carrying on his business activities. Petition disposed of by way of remand. Issues:1. Quashing of orders cancelling Goods and Services Tax (GST) registration.2. Appeal against the rejection of the appeal filed by the petitioner.3. Consideration of the impact of GST registration cancellation on the petitioner's business activities.Analysis:1. The petitioner, a partnership firm engaged in passenger transportation, sought to quash the orders cancelling its GST registration. Respondent No. 1 issued a show cause notice citing non-filing of returns for six months, leading to the cancellation. Despite the petitioner's reply, the cancellation was upheld under Section 29(2) of the CGST Act. The High Court noted the adverse impact of registration cancellation on the petitioner's business and remanded the matter for reconsideration by respondent No. 1.2. The petitioner appealed the cancellation decision to respondent No. 2, who rejected the appeal based on the petitioner's failure to file returns promptly. The appellate authority highlighted discrepancies in the petitioner's tax filings and emphasized the obligation to discharge tax liabilities even after registration cancellation. The High Court found the rejection unjust and set aside both the appellate and original orders, directing a fresh consideration by respondent No. 1 with an opportunity for the petitioner to be heard.3. In the absence of a GST Tribunal, the petitioner's counsel argued against the need for appeal to such a body. The High Court, after reviewing relevant orders and precedents, concluded that justice demanded a reevaluation of the registration cancellation's impact on the petitioner's business. The Court's decision to remand the matter back to respondent No. 1 underscored the importance of procedural fairness and compliance with statutory requirements, emphasizing the petitioner's obligation to submit all returns during the reconsideration process.In summary, the High Court intervened to address the issues surrounding the cancellation of the petitioner's GST registration, emphasizing the need for procedural fairness, compliance with tax obligations, and the preservation of the petitioner's business interests. The judgment highlighted the legal principles governing GST registration cancellations and the importance of providing a fair hearing and opportunity for compliance before making such decisions.