Order for non-granting GST registration must be a speaking order

[CA Bimal Jain]

The Hon’ble Madras High Court in the matter of B.C. MOHANKUMAR VERSUS SUPERINTENDENT OF CENTRAL GOODS & SERVICE TAX, KRISHNAGIRI-1 CIRCLE, KRISHNAGIRI [2022 (7) TMI 445 - MADRAS HIGH COURT] has held that the order for cancelling the GST  registration must be a speaking order and the discretion provided to the department in such cases shall not be used blatantly to violate the principles of natural justice.

Facts:

M/s B.C. Mohan Kumar (“the Petitioner”) had made an application seeking registration in accordance with Section 22 read with Section 25 of the Central Goods and Services Tax Act (“the CGST Act”). The registration  was in respect of a rice mandi, for which the application is duly acknowledged, and physical verification was also undertaken. A notice was issued by the Superintendent of Central Goods & Service Tax (“the Respondent”) for seeking clarification as the application did not enclose the details of principal place of business of the Petitioner, which was duly responded by the Petitioner by uploading a copy of rental deed as his principal place of business. An order (“the impugned order”) was passed rejecting the application without assigning any reasons for the rejection. The Petitioner assails the impugned order is cryptic and entirely non-speaking, whereas, as per the Respondent, the word ‘may’ in Rule 9(4) of the CGST Rule grants discretion to the authority for assigning  reasons.

Issue:

• Whether the impugned order for rejection of registration application was cryptic and non-speaking?

Held:

The Hon’ble Madras High Court in B.C. MOHANKUMAR VERSUS SUPERINTENDENT OF CENTRAL GOODS & SERVICE TAX, KRISHNAGIRI-1 CIRCLE, KRISHNAGIRI [2022 (7) TMI 445 - MADRAS HIGH COURT] held as under:

• The stated  order is non-speaking, arbitrary and evidently has not taken into account the explanation furnished by the Petitioner.
• Stated that, the word 'may' only refer to the discretion to reject and not to blatantly violate the principles of natural justice.
• Noted that, if the assessing authority is inclined to reject the application, he must have assigned  the reasons for such objection and adhere to proper procedure, including due process.
• Held that, the impugned order is set aside and the Petitioner be heard on the objection raised and the application for registration shall be granted.

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