2026 (1) TMI 499 - HC - GST

GST registration cancellation after ex parte adjudication without hearing: assessee gets fresh chance to reply, order set aside

An assessee challenged an ex parte GST adjudication and consequential cancellation of registration on the ground that the show-cause notice was issued ... Ex parte adjudication order passed - Without issuing any pre-intimation, issued a show-cause notice in Form DRC-01 - No opportunity of personal hearing - Cancellation of the GST Registration - HELD THAT:- Having regard to the specific assertion on the part of the petitioner that his inability and omission to submit reply to the show-cause notice and contest the proceedings was due to bonafide reasons, unavoidable circumstances and sufficient cause, It is deem it just and appropriate to adopt a justice oriented approach and provide one more opportunity to the petitioner by setting aside the impugned order at Annexure-D dated 11.11.2024 and remitting the matter back to respondent No.3 for reconsideration of the matter afresh in accordance with law from the stage of petitioner submitting reply to the impugned show-cause notice dated 09.02.2023. Insofar as the cancellation of the GST Registration of the petitioner is concerned, the submission made by the counsel for the petitioner is placed on record. The petition is hereby allowed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned ex parte adjudication order passed pursuant to the show-cause notice was liable to be set aside and the matter remitted, in view of the petitioner's assertion of bona fide reasons and sufficient cause for not submitting a reply and for not participating in the proceedings, and in view of absence of opportunity of personal hearing. 2. Whether the order cancelling the GST registration was liable to be quashed and registration restored, and if so, whether restoration could be made conditional upon filing of returns and payment of up-to-date tax together with interest and penalty within a specified time. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Setting aside the ex parte adjudication order and remand for fresh consideration Legal framework: The Court proceeded on the basis of a 'justice oriented approach' and directed reconsideration 'in accordance with law,' including the requirement to provide 'sufficient and reasonable opportunity' and to hear the petitioner before proceeding further. Interpretation and reasoning: The Court accepted as material the petitioner's specific assertion that failure to submit a reply to the show-cause notice and failure to contest the proceedings occurred due to bona fide reasons, unavoidable circumstances, and sufficient cause. On that basis, the Court considered it appropriate to afford one more opportunity by undoing the consequences of the ex parte order and by restoring the proceedings to the stage of filing a reply to the show-cause notice. The Court also mandated that the authority consider replies/documents to be filed and provide an opportunity of hearing. To ensure seriousness and timely participation, the Court fixed a date for appearance and provided that non-appearance would result in automatic recall of the Court's order. Conclusions: The impugned ex parte order was set aside, and the matter was remitted to the adjudicating authority for fresh consideration from the stage of submission of reply to the show-cause notice. The petitioner was directed to appear on a fixed date without awaiting further notice; the authority was directed to provide reasonable opportunity and hearing; and the relief was made conditional in the sense that failure to appear on the specified date would automatically recall the Court's order. Issue 2: Quashing of GST registration cancellation and conditional restoration Legal framework: The Court ordered quashing of the cancellation order and directed reinstatement/restoration of registration, while imposing conditions requiring compliance through filing returns and payment of tax dues along with interest and penalty within a stipulated period. Interpretation and reasoning: The Court recorded the petitioner's submission that, if the cancellation were set aside, the petitioner would file returns and pay up-to-date taxes. On that basis, the Court granted relief by quashing the cancellation and directing restoration, but balanced it by making restoration subject to timely compliance with return filing and payment of tax, interest, and penalty. The Court specified a four-week timeframe for both the restoration by the authorities and the petitioner's compliance within that same period from receipt of the order. Conclusions: The cancellation order was quashed, and the authorities were directed to reinstate/restore GST registration within four weeks, subject to the petitioner filing GST returns and paying up-to-date tax together with interest and penalty within four weeks from receipt of the order. Non-precedential direction The Court conclusively directed that the order was made in peculiar/special facts and circumstances and shall not be treated as a precedent or as having precedential value for any other purpose.