GST Registration Cancellation Overturned: Petitioner Granted Opportunity to File Pending Returns Within Four Weeks

HC allowed petition challenging GST registration cancellation. The cancellation was deemed arbitrary due to lack of proper opportunity to respond while petitioner was in custody. Court permitted revocation upon filing pending returns within four weeks, with further orders to be passed within two weeks of compliance.

---

---

Issues involved:
Cancellation of GST registration without due opportunity and arbitrariness.

Summary:
The petitioner challenged the first respondent's order cancelling their GST registration, seeking direction for revocation and other reliefs. The petitioner was arrested after certain documents were seized from their business premises. While in custody, the first respondent issued a Show Cause Notice alleging violations of tax laws. The petitioner argued that the cancellation was arbitrary as they were in custody when the notice was issued. The respondents contended that the cancellation was a result of ongoing penal proceedings. However, the reasons for cancellation were deemed arbitrary by the court. The court allowed the petition, permitting revocation of the cancellation upon filing pending returns within a specified timeframe. The petitioner was given four weeks to file the returns, after which suitable orders would be passed within two weeks.

This judgment addressed the issue of cancellation of GST registration without affording due opportunity and arbitrariness in the decision-making process. The petitioner's arrest and subsequent issuance of a Show Cause Notice while in custody raised concerns about procedural fairness. The court found the cancellation based on the notice to be arbitrary and lacking proper justification. The respondents' argument that penal proceedings justified the cancellation was dismissed due to insufficient evidence provided in the impugned order. The court emphasized the importance of procedural fairness and the need for valid reasons to support administrative decisions, especially those with significant consequences like cancellation of GST registration.

The court's decision highlighted the fundamental principle of natural justice, emphasizing the right to be heard and respond before adverse actions are taken. The petitioner's inability to respond to the Show Cause Notice due to being in custody underscored the unfairness of the cancellation process. The court's intervention was based on the principle of arbitrariness, emphasizing the need for administrative actions to be supported by clear and justifiable reasons. By allowing the petition and setting conditions for revocation linked to filing pending returns, the court balanced the interests of both parties while upholding the principles of procedural fairness and natural justice.

---