Natural justice in GST registration cancellation: non-response during judicial custody could not justify adverse orders.

GST registration cancellation was held unsustainable where the taxpayer, being in judicial custody during the notice period, could not reply to the show cause notice or attend personal hearing. The uncontroverted custody claim meant the non-response was not a voluntary default, so the cancellation order was vitiated by breach of natural justice. The later rejection of revocation also failed because it did not cure or address that procedural defect or record reasons supporting refusal. The cancellation and revocation orders were set aside, the matter was remitted to the stage of reply, and registration was directed to be restored with an opportunity of hearing.

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Issues: Whether the orders cancelling GST registration and rejecting revocation were liable to be set aside for violation of principles of natural justice when the petitioner was in judicial custody during the relevant period and could not respond to the show cause notice or avail personal hearing.

Analysis: The cancellation order was passed on the footing that no reply had been filed to the show cause notice and that the opportunity of personal hearing had not been utilised. The petitioner's assertion that he was in judicial custody during the relevant period was not controverted. In such circumstances, the failure to respond to the notice could not be treated as a voluntary default, and the cancellation order stood vitiated by breach of natural justice. The later order rejecting revocation also suffered from the same defect because it did not address the violation of natural justice or record reasons to sustain the rejection.

Conclusion: The orders cancelling the GST registration and rejecting revocation were set aside, and the matter was remitted to the stage of reply to the show cause notice. The petitioner was to be given an opportunity to appear before the authority and the registration was directed to be restored forthwith.

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