Failure to consider reply to show cause notice makes GST registration cancellation unsustainable; fresh hearing required on remand.

The Calcutta HC held that a GST registration cancellation order is unsustainable where the Proper Officer proceeds on the incorrect premise that no reply was filed to the show cause notice. Because the recorded reasons did not reflect consideration of the petitioners' reply and additional documents, the order was treated as mechanical and perverse. The cancellation was set aside and the matter remanded for fresh adjudication after taking the reply into account and granting a hearing, with the petitioners left free to raise all available grounds, including alleged non-compliance with Rule 25 of the West Bengal GST Rules, 2017.

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Issues: Whether the order cancelling the registration was liable to be set aside for failure to consider the petitioners' reply to the show cause notice, and whether the matter required remand for fresh decision after hearing the petitioners.

Analysis: A show cause notice was issued proposing cancellation of registration on allegations of fraud, wilful misstatement or suppression of facts. The petitioners furnished a reply and additional documents, but the cancellation order proceeded on the premise that no reply had been filed. The recorded reasons did not reflect consideration of the response dated 9 February 2021. An order passed on such an incorrect premise, without dealing with the reply, was held to be mechanical and perverse. The petitioners were also left free to urge all available grounds before the Proper Officer, including alleged non-compliance with Rule 25 of the West Bengal Goods and Services Tax Rules, 2017.

Conclusion: The cancellation order was set aside and the matter was remanded to the Proper Officer for reconsideration after taking the petitioners' reply into account and affording them an opportunity of hearing.

Ratio Decidendi: A cancellation order passed without considering the taxpayer's reply to the show cause notice is unsustainable and may be set aside with a direction for fresh adjudication after hearing.

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