Tax Dispute Resolution: GST Registration Cancellation Overturned with Conditional 10% Tax Payment and Opportunity to Respond

HC ruled on GST registration cancellation dispute, quashing the impugned order while mandating the petitioner remit 10% of disputed tax demand. The court granted the petitioner opportunity to contest the tax demand, requiring submission of reply within three weeks and ensuring a personal hearing. A fresh order must be issued within two months, balancing procedural fairness and tax compliance.

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Issues involved:
1. Cancellation of GST registration
2. Non-receipt of show cause notice
3. Discrepancy between GSTR 3B and GSTR 2A returns
4. Right to hearing for taxpayer
5. Remittance of disputed tax demand
6. Opportunity for petitioner to contest tax demand

Analysis:
1. The petitioner, engaged in construction services, applied for cancellation of GST registration in 2019. The cancellation became effective from 01.11.2019. The petitioner claimed unawareness of a show cause notice dated 30.09.2023 and subsequent reminders. A communication dated 21.12.2023 requested more time to respond, followed by the impugned order on 22.12.2023.

2. The petitioner, through its counsel, mentioned in a reply dated 21.12.2023 that awareness of proceedings was gained from an official of the respondent's office. The petitioner sought two weeks to respond to the notice, citing a discrepancy between GSTR 3B and GSTR 2A returns, claiming possession of relevant documents for clarification.

3. The Government Advocate for the respondent referred to the impugned order and highlighted the show cause notice followed by three reminders. Citing a judgment from the Madurai Bench, it was stated that three hearing opportunities are the maximum, not an absolute right. Access to the GST portal post-registration cancellation was noted, suggesting no interference unless terms were imposed.

4. The petitioner's counsel agreed to remit 10% of the disputed tax demand as a condition for remand, indicating willingness to comply with the directive.

5. Considering the cancellation of GST registration, the petitioner's limited monitoring of the portal was acknowledged. The petitioner requested time to respond in December 2023, close to the expiry of the limitation period. Balancing the need for the petitioner to contest the tax demand, the court decided to quash the impugned order subject to the condition of remitting 10% of the disputed tax demand.

6. The court ordered the petitioner to remit the specified amount within three weeks, submit a reply to the show cause notice within that period, and assured a reasonable opportunity for the petitioner to contest the tax demand, including a personal hearing. A fresh order was to be issued within two months from the receipt of the petitioner's reply, concluding the case without costs.

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