GST Registration Cancellation Overturned: Personal Hearing Violation Compels Restoration with Compliance Mandate and Penalty Provisions

The HC found the GST registration cancellation invalid due to lack of personal hearing and non-compliance with natural justice principles. The court ordered immediate restoration of registration, directing the petitioner to file returns, clear tax dues, and pay penalties within four weeks. The respondent retained authority to initiate further proceedings for non-compliance, ensuring tax accountability while providing an opportunity for rectification.

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Issues:
1. Restoration of GST registration
2. Impugned order cancelling GST registration
3. Failure to file returns for six months
4. Lack of personal hearing in Show Cause Notice
5. Compliance with principles of natural justice
6. Payment of tax dues and penalty
7. Restoration of GST registration and conditions
8. Consequences of failure to clear dues
9. Authority to initiate further proceedings
10. Disposal of the petition

Restoration of GST registration:
The petitioner filed a petition seeking directions to restore its GST registration after its registration was cancelled due to failure to file returns for six months. The impugned order cancelling the registration was challenged, and the petitioner claimed to be a bona fide taxpayer willing to pay dues. The court considered the lack of personal hearing in the Show Cause Notice and the non-compliance with principles of natural justice. Consequently, the court set aside the impugned order and directed the immediate restoration of the petitioner's GST registration. The petitioner was instructed to file returns, clear tax dues, pay penalties, and charges within four weeks.

Failure to file returns for six months:
The petitioner's GST registration was cancelled by the respondent after the petitioner failed to file returns for a continuous period of six months. Despite being a bona fide taxpayer, the petitioner did not dispute the non-compliance with this statutory requirement. The cancellation was made effective retrospectively from a specific date.

Lack of personal hearing in Show Cause Notice:
The Show Cause Notice issued to the petitioner did not specify any date, time, or venue for a personal hearing, depriving the petitioner of the opportunity to present its case. This lack of clarity in the notice was highlighted during the proceedings, emphasizing the importance of providing an opportunity for a personal hearing in such matters.

Compliance with principles of natural justice:
The respondent acknowledged that the petitioner failed in statutory compliances by not filing returns but admitted the absence of a personal hearing due to the deficiency in the Show Cause Notice. The court held that the principles of natural justice were not fully complied with in this case, necessitating the setting aside of the impugned order and the restoration of the petitioner's registration.

Payment of tax dues and penalty:
The petitioner expressed readiness to pay all dues and requested the restoration of its GST registration to continue its business activities. The court directed the petitioner to clear all tax dues, penalties, and charges within four weeks of the restoration of registration to ensure compliance with tax obligations.

Authority to initiate further proceedings:
While the court ordered the restoration of the petitioner's GST registration, it clarified that the respondent was not precluded from initiating any other proceedings for non-compliance with statutory provisions or for the recovery of any additional amounts due from the petitioner. This clarification aimed to ensure ongoing compliance and accountability.

Disposal of the petition:
The court disposed of the petition by setting aside the impugned order, restoring the petitioner's GST registration with specified conditions, and outlining the consequences of failure to clear dues within the stipulated timeframe. The order was deemed to be passed in the peculiar facts of the case, concluding the legal proceedings.

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