HC sets aside GST registration cancellation appeal rejection, remands case for proper procedural compliance under Section 107(6)

The HC set aside the Commissioner (Appeal)'s order dated 17th June 2022 that rejected an appeal against cancellation of GST registration. The Commissioner (Appeal) found the appeal defective due to non-compliance with Section 107(6) CGST Act requirements including failure to provide proof of pre-deposit, absence of certified copy of impugned order, and improper authentication under Rule 26. The HC held that after rejecting the appeal on procedural grounds, the Commissioner (Appeal) lacked jurisdiction to decide on merits. The matter was remanded with directions to issue defect memo and provide opportunity for rectification.

---

---

Issues Involved:
1. Legality of the rejection of the application for revocation of cancellation of GST registration.
2. Legality of the demand for tax, interest, and penalties.
3. Compliance with procedural requirements for filing an appeal.
4. Adherence to natural justice principles.

Summary:

Issue 1: Legality of the Rejection of Application for Revocation of Cancellation of GST Registration
The petitioner challenged the order by the Commissioner of Goods and Service Tax and C Ex. [Commissioner (Appeal)] dated 17th June 2022, which upheld the rejection of the application for revocation of cancellation of the petitioner's GST registration. The petitioner argued that the cancellation was improper as the procedure prescribed under Rules 21A, 22, and 23 of the CGST Rules was not followed, and a notice under Section 74 of the CGST Act was not appropriate for processing the refund application.

Issue 2: Legality of the Demand for Tax, Interest, and Penalties
The petitioner contended that the demand of Rs. 1,01,02,741/- along with interest and penalties was raised without following the prescribed procedure for processing refund applications under Rules 89 to 97A of the CGST Rules. The petitioner argued that no demand could be raised while processing the refund application, and at most, an order rejecting the refund application could be passed.

Issue 3: Compliance with Procedural Requirements for Filing an Appeal
The respondents argued that the petitioner failed to comply with mandatory pre-deposit requirements and did not authenticate the appeal as per Rule 26 of the CGST Rules. The Commissioner (Appeal) observed that the appeal was liable to be rejected due to non-compliance with procedural requirements, including the failure to provide proof of pre-deposit, non-filing of a certified copy of the order, and lack of proper authentication of the appeal memo.

Issue 4: Adherence to Natural Justice Principles
The court held that the Commissioner (Appeal) was not justified in deciding the matter on merits after concluding that the appeal was to be rejected on procedural grounds. The court emphasized that justice cannot be denied for failure to comply with procedural requirements without giving an opportunity to rectify the defects. The court cited various judgments, including the Supreme Court's decision in Jagat Dhish Bhargava Vs. Jawahar Lal Bhargava, emphasizing that substantive rights should not be defeated on technical grounds.

Conclusion:
The court set aside the Order in Appeal dated 17th June 2022 and restored the matter to the file of the Commissioner (Appeal). The Commissioner (Appeal) was directed to issue a defect memo to the petitioner, pointing out the procedural defects and providing an opportunity to rectify them. If the petitioner rectifies the defects, the Commissioner (Appeal) will pass a fresh order disposing of the appeal on merits. The petition was disposed of with no order as to costs, and all contentions of the parties were kept open.

---