Natural justice in GST cancellation: order set aside where the notice and final grounds differed and hearing was premature.

GST registration cancellation was unsustainable where the show cause notice relied on reported sales differences against e-way bills, but the cancellation order was based on alleged fraud, wilful misstatement or suppression of facts and on intelligence material that was not supplied to the taxpayer. Because the notice and order rested on different grounds, and the hearing was fixed before the reply period expired, the taxpayer was denied a meaningful opportunity to meet the case ultimately made out. The cancellation was therefore vitiated for breach of natural justice, and the consequential rejection of revocation could not survive.

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Issues: Whether the order cancelling GST registration was vitiated for want of notice on the actual grounds relied upon and for denial of a fair opportunity of hearing, and whether the consequential rejection of revocation could survive.

Analysis: The show cause notice proceeded on the basis of reported less sales compared with e-way bills, whereas the cancellation order rested on an of fraud, wilful misstatement or suppression of facts under Section 29(2)(e) and also referred to material received from the intelligence authorities, which was not supplied to the petitioner. The notice and the order thus proceeded on different foundations. The hearing was also fixed before the time granted for reply had expired, indicating that the petitioner was not afforded a meaningful opportunity to meet the case ultimately made out.

Conclusion: The cancellation order was unsustainable for breach of natural justice and was rightly set aside. The consequential rejection of the revocation application also could not stand and was liable to be quashed.

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