2022 (3) TMI 263 - HC - GST

GST Registration Cancellation Overturned: Court Orders Restoration Within One Week Despite Late Returns

HC allowed the appeal, directing restoration of appellant's GST registration certificate under both state and central acts within one week. The court ... Violation of principles of natural justice - cancellation of registration under GST - rejection of application for revocation as non-speaking order - requirement to disclose computation of shortfall and issue show cause notice - restoration of registration with liberty to issue show cause and pass speaking orderViolation of principles of natural justice - cancellation of registration under GST - Validity of the cancellation of the appellant's registration certificate dated 08.02.2021 by the central authorities. - HELD THAT: - The cancellation order dated 08.02.2021 refers to a show cause notice dated 06.06.2018 issued by the state authorities but contains no reference to the show cause notice dated 02.12.2019 relied upon by the central authorities, and the latter notice was not shown to have been uploaded or communicated to the appellant. In these circumstances the central authorities proceeded without affording effective notice and opportunity to the appellant. The cancellation is therefore in breach of the principles of natural justice and unsustainable.The cancellation dated 08.02.2021 by the central authorities is set aside as violative of natural justice.Rejection of application for revocation as non-speaking order - requirement to disclose computation of shortfall and issue show cause notice - restoration of registration with liberty to issue show cause and pass speaking order - Validity of the order dated 06.10.2021 rejecting the appellant's application for revocation of cancellation passed by the state/central authorities. - HELD THAT: - The appellant filed the returns and paid tax, and submitted computation of late fee and interest; the order rejecting revocation dated 06.10.2021 does not state why the appellant's reply could not be considered nor identify any specific deficiency in the appellant's computation. Where the authorities contend a shortfall in late fee or interest, they must disclose the department's computation and issue a show cause calling upon the assessee to respond. The impugned rejection is devoid of reasons, arbitrary and unreasonable; the Court directed that the authorities may, if they contend any shortfall, issue show cause, allow the appellant to reply and thereafter pass a speaking order in accordance with law.The order dated 06.10.2021 rejecting the revocation is set aside; the authorities are to reconsider with opportunity to the appellant, and to pass a speaking order.Final Conclusion: The impugned orders of cancellation and the rejection of the revocation application are set aside; the appellant's certificate of registration under the State and Central GST Acts is to be restored within one week, subject to the authorities' liberty to issue show cause notices if any shortfall is alleged and to consider the appellant's replies before passing a speaking order. Issues:1. Challenge to order directing respondents to file affidavit-in-opposition and denial of interim relief for restoration of registration certificate under West Bengal Goods & Service Tax Act and Central Goods & Service Tax Act.2. Cancellation of registration certificate by state and central authorities.3. Rejection of application for revocation of cancellation.4. Lack of reasons provided in orders leading to challenges of being unreasonable and arbitrary.5. Jurisdictional issues regarding authorities passing orders.Issue 1: Challenge to Order and Interim ReliefThe appellant filed an intra court mandamus appeal against an order directing respondents to file affidavit-in-opposition and denying interim relief for restoring the registration certificate under the West Bengal Goods & Service Tax Act and Central Goods & Service Tax Act. The appeal was disposed of with consent of counsels.Issue 2: Cancellation of Registration CertificateThe state authorities issued a show cause notice proposing cancellation of the appellant's registration certificate for not filing returns for six months. The appellant filed returns and paid taxes, late fees, and interest. However, the central authorities cancelled the registration without reference to a subsequent show cause notice, indicating a violation of natural justice principles.Issue 3: Rejection of Application for RevocationThe appellant applied for revocation of the cancellation, but the state authorities rejected it citing non-payment of late fees and interest without providing reasons for disregarding the appellant's reply. This rejection was deemed unreasonable, arbitrary, and liable to be set aside.Issue 4: Lack of Reasons in OrdersThe orders of cancellation by state and central authorities, as well as the rejection of the application for revocation, were found to lack reasons, rendering them unsustainable. The absence of clear reasons in the orders led to challenges of being unreasonable and arbitrary.Issue 5: Jurisdictional ConcernsThere were discrepancies regarding whether the orders were passed by state or central authorities, leading to confusion. The lack of clarity in jurisdiction and the arbitrary exercise of authority by either entity were highlighted as violations of natural justice principles.In conclusion, the High Court of Calcutta allowed the appeal and directed the restoration of the appellant's registration certificate under both Acts within a week. The authorities were granted liberty to issue a show cause notice if there are discrepancies in late fee remittances, with a requirement to provide a speaking order in accordance with the law. The court emphasized the importance of providing reasons in orders, ensuring compliance with natural justice principles, and avoiding arbitrary exercises of authority by state or central authorities.