GST Registration Cancellation Order Overturned Due to Procedural Flaws, Petitioner Granted Fresh Hearing Opportunity

The HC examined a GST registration cancellation order with retrospective effect. The Court found procedural irregularities in the cancellation process, particularly the lack of a proper personal hearing. The HC set aside the order and remanded the matter to the Proper Officer, directing a fresh consideration with an opportunity for the petitioner to present their case within two weeks.

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Issues:
1. Impugning an order cancelling GST registration with retrospective effect.
2. Lack of opportunity for personal hearing before cancellation.
3. Authority of Proper Officer to cancel registration with retrospective effect.

Analysis:
1. The petitioner challenged an order cancelling their GST registration with retrospective effect from 26.10.2017. The impugned order lacked reasons for cancellation apart from referring to a Show Cause Notice dated 08.02.2021. The petitioner was required to respond to the notice within seven working days, failing which an ex-parte decision would be made. The registration was suspended from the date of the notice. However, the notice did not propose cancellation with retrospective effect, and no specific date for a personal hearing was provided.

2. The Court acknowledged the petitioner's argument that cancellation without a personal hearing to address retrospective effect was unfair. The petitioner's counsel expressed readiness to accept the cancellation but contested the retrospective aspect. The Court found no valid reason to cancel the registration for a period when returns were filed on time. The respondent's counsel argued that the Proper Officer had the authority under Section 29(2) of the Central Goods and Services Tax Act, 2017, to cancel registration retrospectively as deemed appropriate. The Court agreed to remand the matter to the Proper Officer for reconsideration after hearing the petitioner.

3. Considering the delay in approaching the Court and the circumstances of the case, the Court accepted the respondent's submission for remand. The impugned order was set aside, and the matter was referred back to the Proper Officer for fresh consideration. The petitioner was given two weeks to respond to the Show Cause Notice, and the Proper Officer was directed to make a decision after hearing the petitioner. The petition was disposed of accordingly, along with any pending applications.

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