GST registration cancellation set aside due to violation of natural justice principles for lack of personal notice

The HC set aside the Appellate Authority's order dismissing petitioner's appeal against GST registration cancellation. The court found violation of natural justice principles as no personal notice was served before suspension and cancellation, with notice only uploaded on department's website. Despite time limitation issues under Rule 23(1) of GST Rules 2017, the court exercised inherent power to condone delay, noting that revocation would benefit revenue collection and cause no prejudice to third parties. The court directed the Appellate Authority to re-hear the appeal on merits regarding revocation of GST registration cancellation.

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Issues:
Challenge to cancellation of GST registration without notice, Appeal dismissal on grounds of limitation, Compliance with statutory provisions for revocation application, Impact of COVID-19 pandemic on financial losses, Applicability of period of limitation extension, Authority's duty to consider extension, Power of Writ Court to condone delay.

Analysis:
The petitioner challenged the cancellation of their GST registration without prior notice, arguing a violation of natural justice and statutory provisions. The cancellation order was issued without personal notice, leading to suspension and subsequent cancellation, affecting the petitioner's livelihood. The appeal against cancellation was dismissed as time-barred, as the petitioner missed the deadline due to lack of personal notice. The petitioner highlighted financial losses due to the pandemic as the reason for non-compliance with return filing requirements under GST rules.

The High Court noted the Apex Court's order extending limitation periods due to the COVID-19 pandemic. The Appellate Authority failed to consider this extension while dismissing the appeal solely on the grounds of limitation. The Court emphasized the importance of compliance with statutory provisions and the need to balance the interests of the assessee and revenue. It recognized that non-revocation of GST registration could prejudice only the assessee, not third parties or revenue, and ordered a re-hearing of the appeal on merits.

The Court observed that the purpose of limitation is to ensure compliance and protect third-party rights. It acknowledged the Writ Court's power to condone delays and directed the Appellate Authority to re-hear the appeal without dismissing it on limitation grounds. The respondent authority was instructed to inform the petitioner of outstanding dues, revoking the cancellation upon payment. The petitioner was required to continue periodic statutory dues payments post-revocation as per CGST Act.

In conclusion, the High Court disposed of the writ petition, setting aside the appeal dismissal and ordering a re-hearing on merits. It emphasized the need for compliance, considered the impact of the pandemic on the petitioner's situation, and exercised its power to ensure justice by directing revocation of the GST registration upon payment of outstanding dues.

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