2023 (8) TMI 580 - HC - GST

Principles of Natural Justice - Cancellation of GST registration of petitioner - scope of SCN - contention is that the cancellation of the petitioner s registration is not on the ground as contained in the show cause notice - HELD THAT - There is substance in the contention as urged on behalf of the petitioner, inasmuch as there appears to be no dispute that the impugned order cancelling the registration of the petitioner appears to be on the ground completely outside the scope of show cause notice issued to the petitioner. This would certainly cause prejudice to the petitioner as the petitioner was never granted an opportunity of being confronted with such grounds in the show cause notice, so as to have an opportunity to meet such case of the department. In the absence of such opportunity, certainly the principles of natural justice would become applicable and any order of such nature as passed, would be required to be held to be in breach of the principles of natural justice. The impugned order dated 12 July 2021 is required to be quashed and set aside, with liberty to the respondent to issue a fresh show cause notice to the petitioner as permissible in law and after according an opportunity of a hearing to the petitioner, pass an appropriate order in accordance with law - petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the cancellation of GST registration and the violation of principles of natural justice in the show cause notice process.

Cancellation of GST Registration:
The petitioner sought relief to quash and set aside the impugned orders of suspension and cancellation of GST Registration. The petitioner was issued a show cause notice, to which a reply was filed. The impugned order cancelling the registration was passed, leading to the primary contention that the cancellation was not based on the grounds in the show cause notice. The delay in the appeal process further exacerbated the situation, causing serious prejudice to the petitioner. The petitioner argued that the impugned order needs to be quashed as it was passed on a ground not mentioned in the show cause notice, violating principles of natural justice. Reference was made to previous court decisions to support the contention that the registration should be restored.

Violation of Principles of Natural Justice:
The Court acknowledged the petitioner's argument that the cancellation of registration was based on grounds outside the scope of the show cause notice, depriving the petitioner of the opportunity to address those grounds. It was deemed a breach of natural justice to pass an order without granting the petitioner a chance to respond to new grounds introduced at the final adjudication stage. The Court agreed with the petitioner's reliance on a previous decision where similar orders cancelling registration were set aside. Consequently, the impugned order was quashed and set aside, with the respondent directed to issue a fresh show cause notice and pass an appropriate order after providing a hearing to the petitioner.

Separate Judgment by Judges:
The judgment was delivered orally by G. S. Kulkarni, J., who highlighted the need to quash the impugned order due to the violation of natural justice principles. The Court ordered the restoration of the petitioner's registration within one week, emphasizing that this action should not hinder the department's authority to follow lawful procedures for any future actions. The petition was allowed without costs.