2021 (2) TMI 432 - HC - GST

Court quashes GST registration cancellation order, citing lack of opportunity for petitioner. Technical errors invalidate cancellation.

The Court quashed the ex parte order of cancellation of GST registration due to lack of opportunity for the petitioner. The cancellation was based on the ... Cancellation of GST registration - Service of show cause notice and requirement of appointed date and time for hearing - Principles of natural justice - opportunity of hearing - Validity of ex parte order founded on defective show cause notice - Cancellation for continuous non filing of returns for six monthsService of show cause notice and requirement of appointed date and time for hearing - Principles of natural justice - opportunity of hearing - Validity of ex parte order founded on defective show cause notice - Impugned cancellation of GST registration was quashed as the statutory show cause notice was defective for want of an appointed date and time, resulting in denial of opportunity of hearing and violation of natural justice. - HELD THAT: - The show cause notice in Form GST REG 17 dated 26.02.2020 did not indicate any appointed date or time for personal hearing despite directing the assessee to furnish a reply within seven working days from service and warning of ex parte decision if the assessee failed to appear. The impugned cancellation order dated 13.03.2020 records a system generated statement that the authority had examined the reply and submissions at the time of hearing, whereas, in fact, no date/time was communicated and no opportunity to be heard was afforded. Given the absence of the essential ingredient in the prescribed form, the assessee could not reasonably be expected to file a reply or appear, and the resulting ex parte cancellation cannot be sustained as it offends the principles of natural justice. The court expressly refrained from adjudicating the substantive merits of the alleged six month default and confined its decision to the procedural infirmity in the notice and order. The respondents are, however, at liberty to proceed further in accordance with law if permissible. [Paras 8, 9, 10, 11]Impugned cancellation order dated 13.03.2020 quashed for procedural infirmity in the show cause notice; respondents may proceed in accordance with law.Final Conclusion: Writ petition allowed; order of cancellation of GST registration set aside on grounds of defective show cause notice and denial of opportunity to be heard, without expression on substantive merits; respondents permitted to take further action as per law. Issues:Quashing of ex parte order of cancellation of GST registration due to lack of opportunity for the petitioner, Revocation of cancellation order, Acceptance of belated returns in GSTR-3B, Payment of outstanding dues, Jurisdictional Assistant Commissioner's direction, Legal validity of show-cause notice and cancellation order, Comparison with Gujarat High Court decision, Respondent's arguments on habitual default, Technical errors in notice and order, Violation of principles of natural justice.Analysis:1. The petitioner sought to quash the ex parte order of cancellation of GST registration due to lack of opportunity. The cancellation was based on the petitioner's failure to file six monthly returns, with the petitioner claiming to have filed GSTR-I but not GSTR-3B due to outstanding dues from clients. The petitioner requested revocation of cancellation, acceptance of belated returns, and permission to deposit tax in installments after receiving payments from clients.2. The petitioner challenged the legal validity of the show-cause notice and cancellation order, citing absence of appointed date or time for reply in the notice. The petitioner's belated reply was disregarded, leading to the cancellation order. The petitioner's submission of GSTR-3B after the order was also highlighted to question the jurisdiction of the order.3. The petitioner relied on a Gujarat High Court decision for similar circumstances to support the quashing of the impugned order. The respondent argued the petitioner's habitual default, non-response to the show-cause notice, and failure to pay GST liability and interest. The respondent contended that installment payment was not permissible under GST laws, and interest was imposed for delayed payment.4. The technical errors in the show-cause notice and cancellation order were explained by the respondent, attributing them to system-generated observations. The absence of date and time in the notice was defended as a technical error, and the observations in the order were clarified as system-generated.5. The Court observed the absence of proper show-cause notice elements in the cancellation order, leading to a violation of principles of natural justice. Consequently, the impugned order of cancellation was quashed, allowing the respondent to proceed in accordance with the law if permissible.6. The writ petition was allowed in favor of the petitioner, emphasizing the importance of procedural fairness and adherence to legal requirements in administrative actions related to GST registration cancellation.