GST registration cancellation orders set aside for lack of proper hearing and detailed reasons under Section 108

Gujarat HC set aside GST registration cancellation orders passed by authorities without detailed reasons and proper hearing. Court found violation of natural justice principles where petitioners were denied adequate opportunity to respond. Matter remanded to authorities with directions to pass fresh orders under Section 108 of GST Act within four weeks after providing proper hearing and considering petitioners' replies. Petitions disposed of with liberty to revive if difficulties arise.

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Issues Involved:
1. Challenge to the order of cancellation of registration.
2. Compliance with principles of natural justice.
3. Implementation of procedural guidelines by the respondent-authorities.

Summary:

1. Challenge to the order of cancellation of registration:
The petitioners challenged the order of cancellation of registration passed by the respondent-authorities, arguing that such orders did not contain detailed reasons for cancellation except for a one-line reason.

2. Compliance with principles of natural justice:
The court referenced the Co-ordinate Bench's judgment in the case of M/s. Aggrawal Dyeing & Printing vs. State of Gujarat, which emphasized that show cause notices and final orders must contain all necessary details and information and be forwarded to the dealer by RPAD. The court noted that many impugned orders cancelling registration of dealers often travel beyond the scope of the show cause notice, taking dealers by surprise. The judgment stressed the importance of procedural diligence to avoid unnecessary litigation and ensure compliance with principles of natural justice.

3. Implementation of procedural guidelines by the respondent-authorities:
Despite the 2022 judgment directing proper issuance of notices and orders, the respondent-authorities continued to issue cryptic notices and orders. Following oral directions from the court, senior tax officials were present in court and acknowledged the need to implement the Aggrawal Dyeing & Printing decision. An affidavit-in-reply detailed steps taken, including instructions issued on 15.07.2022 and a detailed SOP on 01.04.2023, mandating that show cause notices and final orders contain all relevant details and documents. The affidavit also mentioned disciplinary actions against non-compliant officers and the initiation of suo-moto revision proceedings u/s 108 of the GST Act for improperly issued cancellation orders.

Court's Order:
The court directed the respondent-authorities to issue revision notices within two weeks, allowing petitioners to file replies and receive hearings. The authorities must provide reasons for cancellation if not previously supplied. The petitions were disposed of with liberty to revive in case of difficulty, emphasizing adherence to the proposed schedule and cooperation from the petitioners.

Direct service is permitted.

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