2023 (4) TMI 818 - HC - GST

Cancellation of GST registration of petitioner - cancellation without giving proper opportunity of filing reply and without giving opportunity of hearing - defreezing/ de-attaching of the Bank Account of the petitioner company - recovery of the amount in demand during pendency of the present writ petition - violation of principles of natural justice - HELD THAT - It cannot be disputed that with the passing of the said order, petitioner is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is nonspeaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. Record, as made available, reveals that the petitioner had applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the petitioner. After Covid-19 Pandemic, petitioner s firm started work. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the petitioner having made a fervent request for condonation of delay in accepting the return, preventing cancellation of registration. The order dated 28/08/2021 passed by the respondent no.3, namely the Joint Commissioner of State Tax, Danapur Circle, Patna is quashed with the petitioner s registration restored, with a further direction to the respondent no. 1, namely The Commissioner, Department of State Taxes, Government of Bihar, Patna to finalize the petitioner s assessment and/or pass appropriate orders, in accordance with law - Petition allowed.

Summary

Issues:
1. Cancellation of registration under Bihar Goods and Services Tax Act, 2017 without notice or opportunity to respond.
2. Violation of principles of natural justice in cancellation order.
3. Failure to condone delay in accepting returns post-Covid-19 pandemic.
4. Relief sought for quashing of cancellation order, restoration of registration, and defreezing of bank account.

Analysis:
1. The petitioner's registration under the Bihar Goods and Services Tax Act, 2017 was cancelled by the Joint Commissioner of State Tax without issuing a notice to show cause or providing an opportunity to respond. The order lacked essential details and failed to explain the reason for cancellation, violating principles of natural justice. The petitioner was subjected to civil and penal consequences without due process, necessitating the cancellation order to be quashed.

2. The cancellation order was deemed nonspeaking and cryptic, rendering it incomprehensible and unjust. The lack of reference to the show cause contents and response further highlighted the violation of natural justice. The order's ambiguity and failure to provide a clear rationale for cancellation warranted its annulment to prevent unjust penal and pecuniary implications on the petitioner.

3. Despite the petitioner's request for condonation of delay in filing returns due to the Covid-19 pandemic, the authorities failed to consider the circumstances and proceeded with the cancellation. The petitioner's diligent efforts post-pandemic to resume operations should have been taken into account, and the delay should have been condoned. The failure to address the delay issue further underscored the unjust nature of the cancellation order.

4. Consequently, the High Court quashed the cancellation order, directed the restoration of the petitioner's registration, and instructed the Commissioner of State Taxes to finalize the assessment and issue appropriate orders in compliance with the law. The relief sought for the defreezing of the petitioner's bank account and a prohibition on coercive recovery actions during the petition's pendency were also granted. The Court emphasized that the delay in filing returns should not be raised again, bringing closure to that particular issue.

In conclusion, the writ petition was allowed, and any related interlocutory applications were disposed of accordingly.