GST registration amendment rejection quashed for denying hearing opportunity under Section 28(2) natural justice violation

Bombay HC quashed the rejection order for GST registration amendment application due to violation of natural justice principles as no hearing opportunity was granted to the petitioner before rejection. The court held that Section 28(2) mandates hearing before rejecting amendment applications and orders must contain reasons. The rejection order lacked reasoning, rendering it arbitrary and illegal. The court directed authorities to decide the amendment application within two weeks. Registration suspension and ITC blocking based on the same address issue were stayed pending fresh decision on the amendment application.

---

---

Issues Involved:
1. Rejection of amendment application for change of address.
2. Suspension of registration and issuance of show cause notice for cancellation.
3. Blocking of Input Tax Credit (ITC).

Summary:

Issue 1: Rejection of Amendment Application for Change of Address

The petitioner challenged the order dated 3 November 2023 by the Deputy Commissioner of State Tax, Bandra (West), Mumbai, which rejected the petitioner's application for amendment of the registration to change the address of the principal place of business. The petitioner argued that the order violated Section 28 of the CGST Act, 2017, specifically the second proviso of sub-section (2), which mandates an opportunity of being heard before rejecting an amendment application. The court noted that no hearing was granted, and no reasons were provided for the rejection, rendering the order arbitrary and illegal. The court quashed the impugned order and directed respondent no. 3 to pass a fresh order after hearing the petitioner within two weeks.

Issue 2: Suspension of Registration and Issuance of Show Cause Notice for Cancellation

The petitioner sought to quash the order dated 20 December 2023 by the Deputy Commissioner of State Tax, which suspended the petitioner's registration and issued a show cause notice for cancellation. The show cause notice cited non-conduct of business from the declared place and violation of Rule 10 of the CGST Rules regarding bank details. The petitioner contended that the bank details were provided and that the rejection of the amendment application was illegal. The court observed that the suspension was based on the same issue of the place of business, which was already addressed in the previous writ petition. The court directed respondent no. 3 to decide on the amendment application within two weeks and take further action based on the outcome.

Issue 3: Blocking of Input Tax Credit (ITC)

The petitioner also challenged the blocking of ITC amounting to Rs. 1,37,76,580/-, which was a system-generated communication based on the same issue of the place of business. The court noted that the blocking of ITC was linked to the amendment application and directed that further action be taken based on the decision on the amendment application.

Orders:

1. The impugned order dated 3 November 2023 was quashed and set aside.
2. Respondent no. 3 was directed to pass a fresh order after hearing the petitioner within two weeks.
3. The petitioner was permitted to file a reply to the show cause notice dated 20 December 2023.
4. Respondent no. 3 was directed to pass an appropriate order considering the reply to the show cause notice and the decision on the amendment application.
5. Liberty was granted to the petitioner to file appropriate proceedings against any adverse orders on suspension/cancellation/blocking of ITC.
6. The petition was disposed of with no costs.

---