GST Registration Cancellation Overturned: Procedural Violations Invalidate Order, Mandating Reconsideration and Fair Hearing

HC ruled in favor of petitioner, finding GST registration cancellation invalid due to procedural violations. The court determined that cancellation without personal hearing breached principles of natural justice and Section 29(2) of GST Act. Order was set aside, directing respondents to reconsider petitioner's GST registration restoration within two weeks, with specific emphasis on providing opportunity to be heard.

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Issues:
The judgment involves the cancellation of GST registration without granting an opportunity for personal hearing, non-compliance with filing monthly GSTR-1 and 3-B returns, and violation of principles of natural justice.

Cancellation of GST Registration without Opportunity for Personal Hearing:
The petitioner, engaged in software publishing and consultancy, had their GST registration cancelled without a personal hearing. The cancellation order was issued without allowing the petitioner to present their case, which is a violation of Section 29(2) of the GST Act, 2017. The petitioner was aggrieved by the cancellation dated 25.02.2023, as it was antedated by eight months and no reply to the show cause notice was considered. The Court held that the impugned order was passed in contravention of the Act by not providing an opportunity to be heard, thus setting aside the cancellation.

Non-Compliance with Filing Monthly Returns:
The petitioner, due to the Covid-19 pandemic, could not conduct business and was submitting nil GST returns. The accountant discontinuing services led to the inability to file monthly GSTR-1 and 3-B returns. The 1st respondent issued a show cause notice proposing cancellation of registration for non-filing of returns for six months. The Court emphasized that the Act does not allow for cancellation without granting an opportunity for the taxpayer to be heard, as per Section 29(2) of the GST Act, 2017.

Violation of Principles of Natural Justice:
The Court found that the impugned order did not adhere to the principles of natural justice, as the petitioner was not given a chance to respond before the cancellation of registration. Relying on previous judgments, the Court concluded that the respondents failed to follow the principles of natural justice. The writ petition was disposed of with a direction for the respondents to consider the petitioner's representation for restoration of GST registration within two weeks, emphasizing the importance of providing an opportunity to be heard.

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