2024 (9) TMI 165 - HC - GST

Violation of principles of natural justice - impugned order of cancellation of registration passed without giving any opportunity of hearing though prayed for by the petitioner - HELD THAT - Inspite of Petitioner seeking some time to respond to the said reasoned show-cause notice letter dated 01st June, 2024 due to medical emergency in Petitioner's family, the respondent, without considering the said request, passed two orders for Cancellation of Registration of the Petitioner in two different formats viz. (i) a non-speaking order of Cancellation in Form GST REG 19 dated 21st June, 2024 and (ii) a speaking order of Cancellation of Registration dated 20th June, 2024 by way of uploading the same on the GSTIN Portal maintained by the Respondent Department. It is evident from the said order dated 21st June, 2024 that only one line reasoning has been given without substantiating the same with supporting documentary evidences and no appropriate justification whatsoever has been stated in the impugned order which supports and corroborates the reason in the form of invoking the provision of Section 29 (2) (e) of the CGST which has been merely mentioned in the impugned show-cause notice proposing to cancel the registration of the Petitioner. The respondent authorities though have granted time of few days, has shown undue haste in passing the impugned order of cancellation and without giving any opportunity of hearing and without considering the reason for adjournment to the effect that mother of the petitioner was suffering from cancer - It also appears from the record that the respondent authorities have shown total inhumane approach to the facts of the case by not granting sufficient time and thereafter passing the impugned order. The impugned order of cancellation of registration dated 20th June, 2024 is hereby quashed and set aside. The matter is remanded back to the respondent No.3 to provide an opportunity of hearing to the petitioner and thereafter pass a fresh de novo order in accordance with law. Such exercise shall be completed within a period of twelve weeks from the date of receipt of copy of this order. Petition disposed off by way of remand.

Summary

Issues:
1. Validity of show-cause notice and order of cancellation of registration under GST Act.
2. Violation of principles of natural justice.
3. Arbitrary exercise of power by tax authorities.
4. Urgency in passing the impugned order without proper consideration of circumstances.

Analysis:

Issue 1: Validity of show-cause notice and order of cancellation of registration under GST Act
The petitioner filed a petition under Article 227 challenging the show-cause notice and orders of cancellation of registration issued by the tax authorities. The petitioner argued that the notices were issued arbitrarily without proper reasons or supporting documents. The court observed that the authorities failed to provide adequate justification for invoking Section 29(2)(e) of the CGST Act. The orders of cancellation lacked substantive reasoning and were passed ex parte without granting the petitioner an opportunity to be heard. The court found the actions of the tax authorities to be unjust and set aside the impugned orders, remanding the matter back for a fresh decision.

Issue 2: Violation of principles of natural justice
The court noted that the tax authorities did not adhere to the principles of natural justice in the proceedings. Despite the petitioner's requests for more time to respond to the notices due to personal reasons, the authorities proceeded with the cancellation orders hastily. The court emphasized the importance of providing a fair opportunity of hearing before taking such drastic actions like cancellation of registration. The lack of consideration for the petitioner's circumstances and the failure to grant a proper hearing rendered the orders invalid.

Issue 3: Arbitrary exercise of power by tax authorities
The court criticized the tax authorities for their arbitrary exercise of power in issuing the show-cause notice and orders of cancellation. The authorities suspended the registration and attached the petitioner's bank accounts without sufficient grounds or evidence. The court found the actions of the authorities to be hasty and lacking proper justification. The failure to follow due process and provide a reasonable opportunity for the petitioner to present their case demonstrated an arbitrary exercise of power by the tax authorities.

Issue 4: Urgency in passing the impugned order without proper consideration of circumstances
The court raised concerns about the urgency displayed by the tax authorities in passing the impugned orders without considering the petitioner's circumstances. Despite the petitioner's genuine reasons for seeking more time to respond to the notices, the authorities proceeded with the cancellation orders hastily. The court noted that the authorities showed a lack of empathy and consideration for the petitioner's situation, highlighting a need for a more humane approach in such matters. The court quashed the impugned orders and directed the authorities to conduct a fresh hearing, emphasizing the importance of a fair and just process in such cases.