2024 (4) TMI 754 - HC - GST

Tax Registration Cancellation Overturned: Procedural Flaws and Natural Justice Principles Protect Taxpayer's Rights to Fair Hearing

M/s. R.B. Dhall Products Versus Assistant Commissioner, Chennai

HC found procedural irregularities in tax registration cancellation. Despite alternative appeal remedy, court recognized principles of natural justice ... Cancellation of GST registration of petitioner - Opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- It is an admitted fact that the show cause notice was served on the petitioner only through Portal on 21.02.2023 and not by means of any other modes of communication, viz., e-mail or letter. Since the petitioner is not well accustomed with the system knowledge, the petitioner is not aware as to when such show cause notice was issued, and for what purpose. Even the earlier Accountant, whom the petitioner has entrusted the work of filing 'NIL' returns, failed to file returns for a period of six months and also not informed the petitioner about the same and the petitioner came to know about the cancellation of their registration only on verification of their returns via. Portal through another Accountant, who has been subsequently engaged by the petitioner. Further, it is noticed that the impugned order was passed without affording opportunity of hearing to the petitioner. Though the petitioner has failed to exhaust the alternative remedy of filing appeal, the same is due to the reason that the petitioner's husband had fallen sick and therefore, she was not in a position to file appeal against the impugned order within the prescribed time. This Court is of the view that suffice it would be to dispose of the Writ Petition with a direction to the petitioner to challenge the impugned order of cancellation of registration by way of appeal before the Appellate Authority, who shall entertain the same and pass orders in accordance with law after affording an opportunity of hearing to the petitioner. The Writ Petition is disposed of. Issues involved: Challenge to order cancelling registration under Tamil Nadu Goods and Service Tax Act, 2017; Violation of principles of natural justice; Alternative remedy of filing an appeal.Challenge to order cancelling registration: The petitioner, running a firm, had dhall products exempted from tax under TNGST Act. Due to the Accountant's failure to file returns for six months without informing the petitioner, a show cause notice was issued, leading to cancellation of registration. The petitioner argued lack of awareness about the notice and violation of natural justice as no hearing was provided before cancellation.Violation of principles of natural justice: The respondent passed the cancellation order without giving the petitioner an opportunity to be heard. The petitioner's inability to file an appeal within the prescribed time due to personal circumstances was highlighted, leading to the decision to pursue a writ petition instead.Alternative remedy of filing an appeal: The respondent contended that the petitioner should have appealed to the Appellate Authority instead of filing a writ petition directly. The petitioner explained the delay in filing the appeal was due to the husband's illness, justifying the approach taken.Judgment: The Court acknowledged the lack of notice awareness and absence of a hearing before cancellation. It directed the petitioner to file an appeal before the Appellate Authority within 30 days, ensuring the appeal is entertained without raising grounds of limitation. The Appellate Authority was instructed to decide on the matter within 30 days.