Ex Parte Cancellation Set Aside; Authority Must Serve Notice and Hold Hearing Before New Order Underlined

The HC set aside the ex parte cancellation order dated 21.02.2025 and remanded the matter to the assessing authority. The petitioner, who had ceased business before the cancellation, was not personally served with the show cause notice. The petitioner is granted three weeks to respond to the SCN issued on 28.11.2024. The authority must provide a hearing opportunity before passing a fresh order. The petition was allowed by way of remand, emphasizing adherence to natural justice.

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ISSUES:

Whether issuance of a show cause notice and subsequent ex parte order under Section 73 of the UPGST Act, 2017 is valid after the petitioner had applied for cancellation of registration and the registration was cancelled with retrospective effect.Whether the failure to serve notice in person and reliance solely on departmental portal notification violates principles of natural justice.Whether an order passed ex parte without the petitioner's knowledge, especially after cancellation of registration, can be set aside and remanded for fresh adjudication.

RULINGS / HOLDINGS:

The Court held that once the petitioner had applied for cancellation of registration which was later cancelled with retrospective effect, "there was no occasion for the respondents to have issued the notice in the Additional Tab," and thus the ex parte order under Section 73 of the UPGST Act, 2017 "deserves to be quashed and set aside."The Court found that the absence of personal service of the notice and reliance solely on the departmental portal constituted a violation of "principles of natural justice," warranting setting aside of the impugned order.The Court allowed the writ petition, set aside the impugned order, and remanded the matter back to the assessing authority for fresh adjudication after providing the petitioner an opportunity to respond to the show cause notice within a specified time frame.

RATIONALE:

The Court applied the legal framework under Section 73 of the UPGST Act, 2017 concerning assessment and cancellation of registration.The Court relied on precedents including M/s Shiv Shakti Traders and Chemsilk Commerce Pvt. Ltd., which established that cancellation of registration with retrospective effect negates the validity of subsequent notices issued on departmental portals without personal service.The Court emphasized adherence to "principles of natural justice," particularly the requirement of notice and opportunity to be heard before passing adverse orders.The decision reflects a consistent doctrinal approach to safeguard taxpayers' rights when registration cancellation precedes issuance of assessment notices, ensuring that procedural fairness is maintained.

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