2024 (10) TMI 126 - HC - GST

Cancellation of petitioner s GST registration with retrospective effect - impugned order does not reflect any reason for cancelling the petitioner s GST registration - whether cancellation of the petitioner s GST registration is warranted for the reason as set out in the SCN? - violation of principle sof natural justice - HELD THAT - The only reason set out in the said SCN for proposing to cancel the petitioner s GST registration is failure to pay tax, interest or penalty within a period of three months from the date on which the said amount became due - However, that is not one of the reasons available under Section 29 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) for cancellation of a taxpayer s GST registration. It is apparent to note that non-payment of dues for a period of three months is not a prescribed ground for cancelling the petitioner s GST registration - It is also important to note that the impugned order sets out a tabular statement, which indicates that no amount has been determined as payable by the petitioner. The impugned order has also been passed in violation of principles of natural justice. Although the SCN called upon the petitioner to appear for a personal hearing at the appointed date and time, no such date or time was indicated. Thus, in effect the petitioner was not afforded an opportunity to be heard - the impugned order is set aside - petition disposed off.

Summary

Issues:
Cancellation of GST registration based on non-payment of dues for three months, violation of principles of natural justice, applicability of Section 29 of the CGST Act, applicability of Rule 21 of the CGST Rules.

Analysis:
The petitioner challenged the cancellation of their GST registration with retrospective effect from 01.07.2017 due to non-payment of dues beyond three months, as stated in the Show Cause Notice (SCN) dated 03.09.2021. The SCN did not specify a date for a personal hearing, and the registration was suspended from 03.09.2021. The impugned order did not provide a reason for the cancellation but referred to the SCN. The central issue was whether the cancellation was justified as per the reasons in the SCN.

The Court noted that the reason for cancellation in the SCN did not align with the grounds specified in Section 29 of the CGST Act, which outlines valid reasons for cancellation. Section 29(2) lists specific contraventions that warrant cancellation, none of which include non-payment of dues for three months. Additionally, Rule 21 of the CGST Rules provides grounds for cancellation, none of which pertain to non-payment within a specified period.

The impugned order lacked clarity on the reason for cancellation and displayed a tabular statement indicating no payable amount by the petitioner. Moreover, the order violated principles of natural justice by not specifying a date for a personal hearing, depriving the petitioner of an opportunity to be heard. Consequently, the Court set aside the impugned order and directed the restoration of the petitioner's GST registration immediately.

The Court clarified that the restoration does not prevent the respondents from pursuing recovery of dues or addressing statutory non-compliances through lawful means. The petition was disposed of accordingly, and any pending applications were also resolved.