2023 (3) TMI 790 - HC - GST

GST Registration Cancellation Overturned: Procedural Fairness Prevails, Petitioner Granted Opportunity to Respond and Rectify Concerns

HC found in favor of petitioner challenging GST registration cancellation. The court set aside the cancellation order and appellate decision, ruling that ... Cancellation of GST registration - non-speaking order - denial of hearing / audi alteram partem - reliance on precedent for uniform relief - delay in filing appeal and doctrine of merger - judicial review under Article 14 - remand for fresh considerationCancellation of GST registration - non-speaking order - denial of hearing / audi alteram partem - judicial review under Article 14 - reliance on precedent for uniform relief - Validity of the order cancelling the petitioner's GST registration where cancellation was recorded to be for non-submission of reply and the order was non-speaking. - HELD THAT: - The Court found that the cancellation order was non-speaking and self-contradictory, recording both submission and non-submission of a reply; petitioner was not heard before cancellation. Following earlier decisions (including the judgment in Writ Tax No.145 of 2022 and the reasoning in M/s Chandrasen), an order of cancellation passed without adequate reasons and prima facie without application of mind fails scrutiny under Article 14. The Court held that non-submission of a reply by itself cannot constitute a legally sustainable ground for cancellation where the order does not assign reasoned application of mind and the affected party was not heard, and therefore the petitioner is entitled to the same relief granted in the cited precedent.The cancellation order dated 30.07.2022 and the appellate order dated 12.01.2023 are set aside and the petitioner is entitled to the benefit of the cited precedent.Delay in filing appeal and doctrine of merger - remand for fresh consideration - Whether the matter should be remitted for fresh consideration and hearing despite the appellate dismissal on ground of delay. - HELD THAT: - Although the appeal was dismissed as time-barred, the Court accepted the petitioner's contention that he had not been heard and invoked the precedent which administered uniform relief where cancellations were non-speaking. The Court exercised remedial equity by permitting the petitioner to tender his reply and directed that, upon his appearance with the reply and certified copy of the order and precedent within three weeks, the respondents must proceed to pass a fresh order in accordance with law. The remand is for fresh consideration and adjudication after hearing and application of mind; the merits of cancellation are not finally adjudicated but are to be reconsidered afresh.Matter remitted to respondents to pass a fresh order in accordance with law after the petitioner files his reply and appears within three weeks; appellate dismissal for delay does not preclude this fresh consideration.Final Conclusion: The writ petition is allowed: the cancellation order and the appellate order are set aside; the petitioner may appear within three weeks with reply and certified copies, and the respondents shall thereupon pass a fresh, reasoned order after hearing in accordance with law. Issues:Challenge to cancellation of GST registration based on non-submission of GST return leading to cancellation order and subsequent dismissal of appeal on grounds of delay.Analysis:The petitioner, a sole proprietary engaged in civil construction work, challenged the cancellation of GST registration due to non-filing of GST return. A show cause notice was issued, but the petitioner claimed non-receipt, leading to cancellation. The petitioner's appeal against cancellation was dismissed for delay. The petitioner argued the cancellation order was contradictory as it mentioned both submission and non-submission of the reply to the show cause notice.The petitioner contended that not being heard before the cancellation order violated principles of natural justice. Citing a previous judgment, the petitioner argued that cancellation solely for non-submission of reply was unjustified. Referring to the judgment in Technosum India Pvt. Ltd. Lucknow case, it was highlighted that cancellation without reason or application of mind violates constitutional principles.The court agreed with the petitioner's arguments, granting relief based on the precedent set by the Technosum India Pvt. Ltd. Lucknow case. The court set aside the cancellation order and the appellate order, allowing the petitioner to submit a reply to the show cause notice within three weeks. The respondents were directed to pass a fresh order in compliance with the law upon receipt of the reply and court orders.In conclusion, the court's decision was in favor of the petitioner, emphasizing the importance of providing reasons and following due process before canceling GST registration solely based on non-submission of a reply to a show cause notice.