2020 (10) TMI 257 - HC - GST

Invalid show cause notice leads to cancellation order quashed for lack of due process, granting opportunity to be heard

M/s Mahavir Traders Versus Union of India

The court found the show cause notice for cancellation of registration to be invalid due to vagueness, rendering it unsustainable. The cancellation order ... Violation of Principles of Natural Justice - Cancellation of registration - Validity of SCN - case of petitioner is that without fixing a date for hearing and without waiting for any reply to be filed by the petitioner, the cancellation order was passed on 31.07.2020 whereby registration of the petitioners with GST department was cancelled - HELD THAT:- Perusal of the same indicates that to such show cause notice no response can be given by any assessee. The show cause notice is as vague as possible and does not refer to any particular facts much less point out so as to enable the noticee to give his reply. We are not entering into the merits of the impugned order as we are convinced that the show cause notice itself cannot be sustained for the reasons already recorded above. Therefore, the cancellation of registration resulting from the said show-cause notice also cannot be sustained. Petition allowed. Issues involved:1. Validity of show cause notice for cancellation of registration2. Legality of cancellation order without affording an opportunity of hearing3. Explanation for discrepancy in cancellation order due to technical glitch4. Decision on the writ petition challenging the cancellation orderAnalysis:1. Validity of show cause notice for cancellation of registration:The show cause notice dated 21.07.2020 was challenged on the grounds of being vague and not providing specific details for the assessee to respond adequately. The notice was found to lack clarity and failed to point out particular facts enabling the noticee to give a proper reply. The court noted that the notice was so vague that no response could be given by any assessee, which rendered it unsustainable.2. Legality of cancellation order without affording an opportunity of hearing:The cancellation order dated 31.07.2020 was passed without fixing a date for hearing and without waiting for any reply from the petitioner. The petitioner's counsel confirmed that no reply was submitted, and no opportunity of hearing was provided. The court observed that although the cancellation order referred to a reply submitted by the petitioner and a personal hearing, the petitioner was neither given a chance to respond nor afforded a hearing. This lack of due process rendered the cancellation order unsustainable.3. Explanation for discrepancy in cancellation order due to technical glitch:The respondent's counsel explained that the cancellation order was affected by a technical glitch in the system (online portal), leading to discrepancies. The reply filed by the respondent was on record, acknowledging the technical issue. However, the court did not delve into the merits of the impugned order, as the show cause notice itself was found to be invalid, thereby rendering the cancellation of registration unsustainable.4. Decision on the writ petition challenging the cancellation order:The court allowed the writ petition, quashing both the show cause notice dated 21.07.2020 and the cancellation order dated 31.07.2020. The court did not grant liberty to proceed afresh but observed that if the law permits, the respondent may proceed afresh in accordance with the law. The parties were given liberty to take appropriate steps concerning any other consequences that may follow from the judgment.