Tax Authorities Must Provide Clear Grounds, Ensure Fair Hearing, and Resolve Case Within Six Weeks of Fresh Notice

HC found the show-cause notice and cancellation order defective due to lack of specific reasons and violation of natural justice principles. The order was set aside, directing tax authorities to issue a fresh notice with clear grounds, allow petitioner's response, conduct a personal hearing, and pass a final order within six weeks, without prejudging the case merits.

---

---

Issues involved:
The issues involved in this case are the validity of a show-cause notice for cancellation of registration under the Goods and Services Tax Act, the adequacy of reasons provided for cancellation, and the principles of natural justice.

Validity of Show-Cause Notice and Order:
The petitioner filed a petition under Article 226 of the Constitution to challenge a show-cause notice dated 26.04.2022 and an order dated 07.05.2022 issued by the State Tax Officer for cancellation of registration. The reason cited in the show-cause notice was the absence of business activities and a business board at the specified place. The petitioner responded to the notice on 06.05.2022, but the subsequent order of cancellation did not consider this reply adequately. The order, issued on 07.05.2022, mentioned an effective cancellation date of 29.12.2021, creating confusion. The petitioner later applied for revocation of the cancellation, which was unsuccessful.

Adequacy of Reasons and Natural Justice:
The court found that the show-cause notice and the subsequent order were vague and lacked specific details or reasons for the cancellation. The order was described as non-speaking and inconsistent, failing to provide the petitioner with a clear understanding of the allegations against them. The court emphasized that a nonspeaking order deprives the affected party of the right to know the reasons behind the decision, thus violating principles of natural justice. It was concluded that the order must be set aside due to its cryptic nature and lack of clarity.

Court's Decision and Directions:
The court set aside the impugned order dated 07.05.2022 on the grounds of being cryptic and non-speaking. In addition, the court issued directions for the future proceedings, including the issuance of a fresh notice with proper grounds and reasons, allowing the petitioner to submit a reply by a specified date, scheduling a personal hearing, and requiring the authority to pass a final order within six weeks. Importantly, the court clarified that these directions were given without delving into the merits of the case presented by either party. Ultimately, the petition was allowed in the specified terms.

---