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of <h1>GST Registration Cancellation Overturned: Petitioner Wins Interim Relief for Lack of Natural Justice Principles</h1> <h3>ATT SYS India Pvt Ltd Estex Tele Private Limited Consortium Versus The Commissioner Goods And Services Tax Delhi</h3> The HC allowed the petitioner's interim relief application, finding the GST registration cancellation void due to lack of natural justice. The court ... Principles of natural justice - cancellation of GST registration of petitioner - cancellation without issuance of any SCN or without affording the petitioner, any opportunity to be heard - HELD THAT:- According to the petitioner, it did not receive the SCN. However, even if the respondent’s contention is accepted that a SCN, a copy of which is handed over, was, issued to the petitioner, the same would be of little assistance to the respondent because the SCN does not mention any time or date for personal hearing. Thus, the petitioner was not afforded a hearing to contest the SCN. The impugned order cancelling the petitioner’s registration is void as it has been passed in violation of the principles of natural justice - the impugned order is not informed by reason. It does not set out any ground for cancelling the petitioner’s GST registration. Thus, said order cannot be sustained. It is considered apposite to direct that the petitioner’s GST registration be restored forthwith. The petitioner shall also comply with the statutory provisions by filing the returns in accordance with law. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether cancellation of GST registration is valid when effected without issuance of a show cause notice specifying grounds and without affording an opportunity of personal hearing. 2. Whether service of a show cause notice through the portal, without specifying time or date for a personal hearing, satisfies principles of natural justice. 3. Whether filing Nil returns, by itself, constitutes a valid legal ground for cancellation of GST registration. 4. Whether an order cancelling GST registration that does not state reasons or the grounds for cancellation can be sustained. 5. Whether, in the circumstances of invalid cancellation, restoration of GST registration is appropriate and whether such restoration precludes subsequent proceedings in accordance with law. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of cancellation without issuance of a show cause notice specifying grounds and without affording opportunity of personal hearing Legal framework: Principles of natural justice require that a person affected by administrative action be given notice of the case against them and an opportunity to be heard before adverse action is taken. Under the GST regime, cancellation of registration ordinarily follows issuance of a show cause notice and opportunity to respond. Precedent treatment: The Court did not rely upon or cite any prior judicial decisions in the judgment; no precedent was followed, distinguished or overruled. Interpretation and reasoning: The Court examined the record and noted absence of any show cause notice specifying time for hearing and absence of any reason stated in the cancellation order. Even assuming the portal service, the lack of an opportunity for personal hearing meant that the affected person could not contest the proposal to cancel. The impugned order was therefore found to have been passed in violation of natural justice. Ratio vs. Obiter: Ratio. The Court's conclusion that cancellation without a meaningful notice and hearing is void applies directly to the facts and constitutes the legal principle applied. Conclusion: Cancellation of GST registration in these circumstances is void for breach of principles of natural justice; restoration is warranted. Issue 2 - Sufficiency of service via portal without specifying time/date for personal hearing Legal framework: Service of notices may be effected through statutory electronic means where permitted, but procedural fairness requires that an opportunity to be heard be communicated and made available. Precedent treatment: No precedents were cited. Interpretation and reasoning: The Court accepted the respondent's concession that the show cause notice was served through the portal, but observed the notice lacked any time or date fixed for a personal hearing. The absence of such particulars meant the procedural requirement of affording a hearing was not met; portal service alone could not cure the failure to inform the party of how and when they could be heard. Ratio vs. Obiter: Ratio. The finding that portal service absent hearing particulars does not satisfy natural justice underlies the decision to set aside the cancellation. Conclusion: Portal service without communicating an opportunity for a hearing is insufficient; the affected party must be afforded a hearing before cancellation. Issue 3 - Whether filing Nil returns alone is a ground for cancellation of GST registration Legal framework: Statutory grounds for cancellation under GST must be lawful and compliant with procedural safeguards; administrative action cannot be based on a ground that is not legally tenable. Precedent treatment: No precedents were cited; the respondent conceded the point. Interpretation and reasoning: The respondent candidly accepted that filing Nil returns may not, by itself, constitute a valid ground for cancelling registration. The cancellation order recorded the proposed reason as 'Filing zero return for last six months,' yet the ultimate cancellation order did not articulate reasons. Given the concession and absence of articulated grounds, reliance on Nil returns alone was insufficient to sustain cancellation. Ratio vs. Obiter: Ratio with respect to the present facts-cancellation based solely on Nil returns is not sustainable without supporting legal basis and compliance with procedure. Conclusion: Filing Nil returns, without more and absent lawful procedure, does not justify cancellation of GST registration. Issue 4 - Validity of an order of cancellation that does not state reasons or grounds Legal framework: Administrative orders adversely affecting rights must ordinarily state reasons so that the affected party can understand and, where appropriate, challenge the legal and factual basis of the decision. Precedent treatment: None cited. Interpretation and reasoning: The cancellation order in the record left the space for reasons blank and expressly noted cancellation for non-reply to the show cause notice. The order therefore lacked stated grounds and explanation. The Court held that an unexplained adverse order cannot be sustained, particularly when combined with procedural defects. Lack of reason rendered the order void. Ratio vs. Obiter: Ratio. The requirement that reasons be disclosed in adverse administrative orders is applied to invalidate the impugned order. Conclusion: An order cancelling GST registration that does not set out reasons cannot be sustained and is void. Issue 5 - Appropriateness of restoration and permissibility of future action by authorities Legal framework: Where an administrative order is void for procedural infirmity, courts may direct restoration of status quo ante while preserving the right of authorities to proceed in accordance with law, subject to compliance with procedural safeguards. Precedent treatment: No precedent reliance. Interpretation and reasoning: Given the cancellation was set aside for breach of natural justice and lack of reasons, the Court directed immediate restoration of GST registration and permitted the petitioner to file returns and comply with statutory obligations. The Court explicitly clarified that this restoration does not bar GST authorities from initiating further proceedings if statutory non-compliance is established, provided such proceedings comply with law. Ratio vs. Obiter: Ratio in the context of relief granted-restoration coupled with reservation of the authorities' rights is the Court's operative remedy. Conclusion: Restoration of GST registration is directed; the authorities retain the ability to take lawful steps thereafter, provided due process is observed. Cross-references The issues concerning absence of adequate notice/hearing (Issues 1 and 2) and absence of reasons (Issue 4) are interrelated and jointly inform the Court's conclusion that the cancellation order is void. Issue 3 (Nil returns) reinforces the insufficiency of the purported ground for cancellation and is embedded within the analysis of Issues 1 and 4. Issue 5 flows from the combined conclusions on issues 1-4 and prescribes the remedial course.
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