2023 (5) TMI 504 - HC - GST

Cancellation of registration of petitioner - non-speaking order - petitioner submitted that the notice seeking to cancel the registration was too vague to be countenanced and that no details were furnished as to what weighed with the authorities in proceeding to cancel the GST registration of the petitioner - principles of natural justice - HELD THAT - It is to be observed that a mere perusal of the show-cause notice as well as the impugned order would indicate that the notice was vague and was without any particulars. The order did not disclose any reason for cancellation of registration. A nonspeaking order which does not disclose the reason and does not specify the grounds on which the decision is rested could be said to be amounting to breach of natural justice. Right to know reasons is a legitimate right for a litigant. Absence of reasons is deprivation of reasonable opportunity as well, inasmuch as the person against whom the order is passed would not know as to on which consideration, the order is founded. As the impugned order suffers from the vice of being cryptic and non-speaking, it is liable to be set aside only the said ground alone. The impugned order dated 07.05.2022 is hereby set aside - petition allowed.

Summary

Issues involved:
The issues involved in this case are the validity of a show-cause notice for cancellation of registration under the Goods and Services Tax Act, the adequacy of reasons provided for cancellation, and the principles of natural justice.

Validity of Show-Cause Notice and Order:
The petitioner filed a petition under Article 226 of the Constitution to challenge a show-cause notice dated 26.04.2022 and an order dated 07.05.2022 issued by the State Tax Officer for cancellation of registration. The reason cited in the show-cause notice was the absence of business activities and a business board at the specified place. The petitioner responded to the notice on 06.05.2022, but the subsequent order of cancellation did not consider this reply adequately. The order, issued on 07.05.2022, mentioned an effective cancellation date of 29.12.2021, creating confusion. The petitioner later applied for revocation of the cancellation, which was unsuccessful.

Adequacy of Reasons and Natural Justice:
The court found that the show-cause notice and the subsequent order were vague and lacked specific details or reasons for the cancellation. The order was described as non-speaking and inconsistent, failing to provide the petitioner with a clear understanding of the allegations against them. The court emphasized that a nonspeaking order deprives the affected party of the right to know the reasons behind the decision, thus violating principles of natural justice. It was concluded that the order must be set aside due to its cryptic nature and lack of clarity.

Court's Decision and Directions:
The court set aside the impugned order dated 07.05.2022 on the grounds of being cryptic and non-speaking. In addition, the court issued directions for the future proceedings, including the issuance of a fresh notice with proper grounds and reasons, allowing the petitioner to submit a reply by a specified date, scheduling a personal hearing, and requiring the authority to pass a final order within six weeks. Importantly, the court clarified that these directions were given without delving into the merits of the case presented by either party. Ultimately, the petition was allowed in the specified terms.