2022 (7) TMI 445 - HC - GST

Rejection of application for registration under the provisions of the Central Goods and Service Tax Act, 2017 - the order is assailed on the ground that it is that it is cryptic and entirely non-speaking - HELD THAT - An order of this nature is indefensive insofar as it is non-speaking, arbitrary and evidently has not taken into account the explanation furnished by the petitioner. Learned counsel for the respondent refers to Rule 9(4), particularly the deployment of the word 'may' herein, that according to him, grants discretion to the authority to assign reasons - As the evident, the word 'may' only refers to the discretion to reject and not to blatantly violate the principles of natural justice. If the assessing authority is inclined to reject the application, which he is entitled to, he must assign reasons for such objection and adhere to proper procedure, including due process. The impugned order is set aside - Petition allowed.

Summary

Issues:
1. Rejection of application for registration under the Central Goods and Service Tax Act, 2017.
2. Lack of reasons provided for rejection of the application.

Analysis:
The petitioner challenged the rejection of their application for registration under the Central Goods and Service Tax Act, 2017, citing that the order was cryptic and non-speaking. The petitioner had applied for registration concerning a rice mandi, with proper acknowledgment and physical verification undertaken. Subsequently, a notice was issued seeking clarification regarding the principal place of business, which the petitioner duly responded to by uploading a registered rental/lease deed. However, the rejection order was passed without any reasons or explanation, which was deemed arbitrary and non-defensive by the court.

The court considered Rule 9(4) of the Central Goods and Services Tax Rules, 2017, which allows the authority to reject an application if not satisfied with the clarification provided, but mandates that reasons must be recorded in writing for such rejection. The court emphasized that the discretionary power to reject does not absolve the authority from providing reasons and following due process, including adherence to principles of natural justice.

Consequently, the court set aside the impugned order and directed that the petitioner be given an opportunity to be heard on the objection raised. The court instructed that orders on the application for registration should be passed within four weeks from the date of the judgment. The writ petition was allowed with no costs, and connected miscellaneous petitions were closed as a result of the judgment.