2021 (2) TMI 432 - HC - GST

Principles of Natural Justice - validity of ex parte order of cancellation of GST registration of the petitioner - time limitation - registration cancelled on the ground of failure to file six monthly returns from August, 2019 to January, 2020 by the petitioner within the prescribed time limit - HELD THAT - Admittedly, no reply to the show-cause was filed by the petitioner. However, a perusal of the impugned order at Annexure- 2 dated 13.03.2020 shows the observation of the Superintendent, CGST, respondent no. 4 that he has examined the reply and submissions made at the time of hearing by the assesse and is of the opinion that his registration is liable to be cancelled for the following reasons. Thereafter, the order records that the assesse has not responded to the show-cause notice dated 26.02.2020 for cancellation of his GST registration on the ground of failure to file six monthly returns from August, 2019 to January, 2020 within prescribed time limit. The merits of the impugned order is not considered as the ingredients of a proper show-cause notice as per the prescribed form GST REG-17 are completely absent. Petitioner could not furnish his reply as no date or time was indicated therein. As such, the cancellation of registration resulting from such an incomplete show-cause notice also cannot be sustained being violative of principles of natural justice. The impugned order of cancellation of registration is quashed - Petition allowed.

Summary

Issues:
Quashing of ex parte order of cancellation of GST registration due to lack of opportunity for the petitioner, Revocation of cancellation order, Acceptance of belated returns in GSTR-3B, Payment of outstanding dues, Jurisdictional Assistant Commissioner's direction, Legal validity of show-cause notice and cancellation order, Comparison with Gujarat High Court decision, Respondent's arguments on habitual default, Technical errors in notice and order, Violation of principles of natural justice.

Analysis:

1. The petitioner sought to quash the ex parte order of cancellation of GST registration due to lack of opportunity. The cancellation was based on the petitioner's failure to file six monthly returns, with the petitioner claiming to have filed GSTR-I but not GSTR-3B due to outstanding dues from clients. The petitioner requested revocation of cancellation, acceptance of belated returns, and permission to deposit tax in installments after receiving payments from clients.

2. The petitioner challenged the legal validity of the show-cause notice and cancellation order, citing absence of appointed date or time for reply in the notice. The petitioner's belated reply was disregarded, leading to the cancellation order. The petitioner's submission of GSTR-3B after the order was also highlighted to question the jurisdiction of the order.

3. The petitioner relied on a Gujarat High Court decision for similar circumstances to support the quashing of the impugned order. The respondent argued the petitioner's habitual default, non-response to the show-cause notice, and failure to pay GST liability and interest. The respondent contended that installment payment was not permissible under GST laws, and interest was imposed for delayed payment.

4. The technical errors in the show-cause notice and cancellation order were explained by the respondent, attributing them to system-generated observations. The absence of date and time in the notice was defended as a technical error, and the observations in the order were clarified as system-generated.

5. The Court observed the absence of proper show-cause notice elements in the cancellation order, leading to a violation of principles of natural justice. Consequently, the impugned order of cancellation was quashed, allowing the respondent to proceed in accordance with the law if permissible.

6. The writ petition was allowed in favor of the petitioner, emphasizing the importance of procedural fairness and adherence to legal requirements in administrative actions related to GST registration cancellation.