GST registration cancellation without personal hearing for small traders-order set aside, registration restored after e-notice concerns

Cancellation of GST registration was challenged on the ground that the impugned order was passed without affording a personal hearing, violating principles of natural justice. The HC held that mere electronic service of notices is often ineffective for small and uneducated traders who are not accustomed to email-based compliance, and that meaningful opportunity to respond is integral to a valid cancellation. Relying on its earlier ruling that excluding such taxpayers from the GST regime serves no useful purpose, the HC interfered with the cancellation order and allowed the writ petition, thereby restoring the petitioner's ability to remain within the GST framework.

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Issues Involved:
1. Cancellation of GSTN Registration.
2. Non-filing of returns due to accountant's ill-health.
3. Statutory limitation period for filing an appeal.
4. Right to livelihood and trade under the Constitution.

Summary:

1. Cancellation of GSTN Registration:
The petitioner's GSTN Registration No. 33ACAFS3704M2Z6 was canceled by the respondent on 03.02.2023 due to non-filing of returns. The petitioner, engaged in executing contract works for the Government, argued that the cancellation was done without a proper hearing.

2. Non-filing of Returns Due to Accountant's Ill-health:
The petitioner claimed that returns were regularly filed through an accountant who, due to ill-health, failed to file returns on time. This led to the cancellation of the GST registration, adversely affecting the petitioner's business and livelihood.

3. Statutory Limitation Period for Filing an Appeal:
The petitioner was unable to appeal the cancellation within the prescribed 90-day limitation period under Section 107(4) of the GST Act, as the GST portal did not accept the appeal post the limitation period. The respondent argued that sufficient opportunities were given to the petitioner to respond to the show cause notice issued on 25.01.2023.

4. Right to Livelihood and Trade under the Constitution:
The court referenced similar cases, such as the Bombay High Court and Uttarakhand High Court judgments, emphasizing that the GST provisions should not deny the right to trade and livelihood guaranteed under Articles 19(1)(g) and 21 of the Constitution. The court noted that stringent GST provisions should not deprive individuals of their livelihood, especially in unique circumstances like the pandemic and health issues.

Judgment:
The court allowed the writ petition, setting aside the impugned order dated 03.02.2023. The petitioner was directed to file returns within six weeks. The court highlighted that the objective of the government is to promote trade, not to curtail it, and emphasized the need for the department to consider issuing notices in regional languages and via SMS to ensure better compliance from uneducated traders. No costs were imposed.

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