2024 (1) TMI 320 - HC - GST

GST registration cancellation notice quashed for failing to provide specific reasons and violating natural justice principles under Rule 21(a)

Gujarat HC quashed GST registration cancellation notice for violating natural justice principles. The show cause notice failed to specify reasons or ... Violation of principles of natural justice - petitioner did not have a fair opportunity to defend itself - non application of mind - Cancellation of GST registration of petitioner - HELD THAT:- On perusal of the tenor of impugned show cause notice, it appears that neither specific reasons are assigned as to why the registration of the petitioner is proposed to be cancelled nor any supporting documents are attached to justify the reason - The impugned notice only states that the registration is liable to be cancelled for the reason “Rule 21(a)- a person does not conduct any business from declared place of business.” Thus it is evident from the notice itself that the impugned notice is bereft of any reason or documentary evidence in support of such reason. By now it is well settled that the reasons are heart and soul of any order and non-communication of the same amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice and resultantly violates principles of natural justice. The impugned show cause notice dated 23.06.2023 is hereby quashed and set aside. The respondent authorities shall issue fresh notice with particulars of reasons incorporated with details and thereafter to provide reasonable opportunity of hearing to the petitioner and to pass appropriate order in accordance with law. The concerned respondent is hereby directed to restore the registration of the petitioner forthwith. Petition allowed. Issues Involved:1. Validity of the show cause notice dated 23.06.2023 issued under Section 29 of the GGST Act.2. Compliance with principles of natural justice in the issuance of the show cause notice.3. Adequacy of reasons and documentary evidence provided in the show cause notice.Summary:1. Validity of the Show Cause Notice:The petitioner challenged the show cause notice dated 23.06.2023 issued by the respondent under Section 29 of the GGST Act, seeking its quashing. The petitioner argued that the notice lacked specific allegations and supporting documents, making it impossible to file a proper reply.2. Compliance with Principles of Natural Justice:The petitioner contended that the notice violated principles of natural justice as it did not provide sufficient details or documents to substantiate the allegations. The petitioner cited the case of M/s Mahadev Trading Company v. Union of India, where a similar vague show cause notice was deemed unsustainable by the court. The petitioner also referenced the case of I.E. Vittal v. Appropriate Authority, emphasizing that the denial of documents relied upon by the authority violates natural justice.3. Adequacy of Reasons and Documentary Evidence:The court observed that the impugned notice did not assign specific reasons or attach supporting documents justifying the proposed cancellation of registration. It was noted that the notice merely stated that the petitioner was not conducting business from the declared place without providing any evidence. The court reiterated that reasons are the heart and soul of any order, and non-communication of the same amounts to denial of a reasonable opportunity of hearing, resulting in a miscarriage of justice.Judgment:The court held that the impugned show cause notice was cryptic, lacked reasons, and violated principles of natural justice. Consequently, the notice was quashed and set aside. The respondent authorities were directed to issue a fresh notice with detailed reasons and provide a reasonable opportunity of hearing to the petitioner. The court ordered the immediate restoration of the petitioner's registration. The court clarified that it had not examined the merits of the case.