2022 (4) TMI 53 - HC - GST

Seeking restoration of registration certificate of the Petitioners - non-filing of returns continuously for a period of six months - non-speaking order - violation of principles of natural justice - HELD THAT - The order passed by the respondent No.3 cancelling the registration is also presumed to be on the very same ground though, the order cancelling the registration is a non speaking order. However, we fail to understand how could the appellate authority behind the back of the firm could have taken into consideration the report of the spot visit undertaken by the respondent No.3 for the purpose of dismissing the appeal. Was the firm put to notice that the appellate authority intends to look into the spot visit report prepared by the respondent No.3. If the appellate authority would have put the firm to the notice, probably, the firm could have appropriately replied to the same. It appears that behind the back of the firm, the ground which is not at all in the show cause notice has been considered and ultimately, appeal came to be dismissed. The entire procedure undertaken not only by the respondent No.3 but even by the appellate authority is in absolute violation of the principles of natural justice. The impugned order passed by the Deputy Commissioner of State Tax, Appeal 6, Vadodara dated 17.11.2021 is hereby quashed and set aside - Application allowed.

Summary

Issues:
1. Cancellation of GST registration due to non-filing of returns.
2. Validity of the order cancelling the registration.
3. Natural justice principles in appellate proceedings.

Analysis:
1. The writ applicants sought relief against the impugned orders cancelling their GST registration due to non-filing of returns. The firm was unable to file returns, leading to a show cause notice and subsequent cancellation order by the respondent No.3.

2. The cancellation order lacked essential details and was challenged before the appellate authority. The appellate authority dismissed the appeal based on a negative spot visit report without giving the firm an opportunity to respond to this new ground, violating principles of natural justice.

3. The High Court found the procedures followed by the respondent No.3 and the appellate authority to be in violation of natural justice. The Court held that considering new grounds without notifying the firm was unjust. Consequently, the Court allowed the writ application, quashed the impugned orders, and directed the revival of GST registration upon compliance with tax payments within a specified period.

4. The Court emphasized the importance of adherence to natural justice principles in administrative proceedings and left room for future spot inspections to be conducted in compliance with the law.

5. The judgment, delivered by Honourable Mr. Justice J.B.Pardiwala and Honourable Ms. Justice Nisha M. Thakore, highlighted the significance of fair procedures and the right to be heard in matters affecting individuals' rights, ensuring a balanced and just administrative process.