GST registration cancellation quashed for lack of reasons and natural justice violation, matter remanded under section 108

The Gujarat HC quashed the cancellation of petitioner's GST registration dated 11.3.2020 for lack of reasons and violation of natural justice principles. The petitioner could not file returns from January 2018 due to absence of consultant, but authorities provided no justification for cancellation. The appellate authority's dismissal prevented revisional remedies under section 108 GST Act. The court remanded the matter to the Assessing Officer with directions to provide detailed reasons for cancellation within two weeks, allowing the petition through remand.

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Issues:
Challenge to cancellation of registration under Central Goods and Service Tax Act, 2017.

Analysis:
1. Cancellation of Registration: The petitioner, a tour operator, challenged the cancellation of registration by the Commissioner (Appeals) and Superintendent under Section 29(2) of the Central Goods and Service Tax Act, 2017. The petitioner's registration was cancelled due to non-filing of returns for six months, leading to a total tax liability of Rs. 13,13,725. The petitioner cited financial difficulties during the pandemic as the reason for non-compliance but later paid all outstanding dues amounting to Rs. 26,95,432. The Appellate Authority rejected the appeal on grounds of limitation.

2. Petitioner's Arguments: The petitioner contended that the cancellation order lacked reasons and should be quashed. They argued that past returns were filed, taxes paid, and staying out of the tax regime served no purpose. Citing a previous court decision, the petitioner emphasized the need for detailed show cause notices and reasoned orders, which were lacking in this case.

3. Respondent's Arguments: The respondents defended the cancellation, stating that the show cause notice was duly served, but the petitioner failed to respond promptly. They highlighted the delay in filing the appeal as a reason for justifying the cancellation. The respondents urged the court not to entertain the petition.

4. Court's Decision: The High Court found the cancellation order lacking in reasons, following a precedent emphasizing the importance of detailed notices and evidence disclosure to avoid unnecessary litigation. The Court remanded the matter back to the Assessing Officer at the show cause notice stage, suspending the petitioner's registration until a decision is made. The Assessing Officer was directed to provide detailed reasons, allow the petitioner to respond, and pass an order within specified timelines.

5. Outcome: The petition was partially allowed, quashing the Appellate Authority's order and remanding the case for further proceedings. The Court clarified that it did not delve into the merits of the case, leaving the final decision to the respondent authorities. The parties were instructed to adhere to the proposed timeline for resolving the show cause notice, with liberty to revive the petition if needed.

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