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 without pre-intimation and without affording personal hearing, and that failure to reply was due to bona fide and unavoidable circumstances constituting sufficient cause. The HC adopted a justice-oriented approach, holding that the assessee should be granted one further opportunity to respond and contest the proceedings in accordance with law. The impugned adjudication order was set aside and the matter remitted to the proper officer for fresh consideration from the stage of filing reply to the show-cause notice; the writ petition was allowed.

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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.

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