GST Registration Cancellation Order Struck Down for Insufficient Reasoning and Failure to Provide Proper Hearing

HC found the GST registration cancellation order invalid due to lack of substantive reasoning. The show cause notice and cancellation order were cryptic and failed to address the petitioner's explanations. The Court quashed the orders, directing the Assistant Commissioner to issue a fresh notice, provide proper hearing, and make a reasoned decision in accordance with legal principles.

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Issues:
Challenge to the validity of the order cancelling GST registration.

Analysis:
The petitioner challenged the validity of an order cancelling their GST registration. The Assistant Commissioner issued a show cause notice alleging violations of Rule 21 (b) and 21 (a) of the Act. The petitioner responded, asserting genuine engagement in the business of sale and purchase of scrap material. The registration was cancelled citing non-conduct of business from the declared place. The cancellation was effective from 01.02.2024, done with retrospective effect. The petitioner appealed, but it was dismissed due to the absence of a memo of appeal, making it difficult to ascertain the grounds for restoration. The Appellate Authority rejected photographs submitted by the petitioner, claiming they were managed post-cancellation.

Legal Analysis:
The Court noted that the show cause notice and cancellation order lacked proper justification. The notice was cryptic, merely alleging violations without mentioning inspection findings or considering the petitioner's explanation. The cancellation order did not address the petitioner's response to the notice. The Court emphasized that any order with adverse consequences must be supported by valid reasons. The Appellate Authority's dismissal for lack of clear grounds mirrored the deficiencies in the cancellation order. Merely citing rule violations without substantiation does not justify cancellation. Consequently, the Court deemed the orders of 18.03.2024 and 03.05.2024 legally unsustainable.

Conclusion:
The High Court allowed the writ petition, quashing the orders of the Assistant Commissioner and Additional Commissioner. The Assistant Commissioner was directed to issue a fresh notice, provide a proper hearing to the petitioner, and make decisions in accordance with the law, considering the petitioner's pleas and evidence.

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