2021 (10) TMI 469 - HC - GST

Cancellation of registration of the petitioner - Violation of principles of natural justice - ex-parte order passed by the respondent No.3 - condonation of delay in filing returns - HELD THAT - The petitioner had applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the petitioner. Since the year 2017, petitioner has been regularly filing its return and depositing all dues. All this was done through the petitioner s Tax Consultant who was professionally engaged to undertake such task. Unfortunately, information of the returns for certain period not being uploaded, surfaced in the year 2019 and the cause was totally beyond the petitioner s reach. Perhaps, the Tax Consultant is no more in the land of living. The competent authority can condone the delay for filing the returns, in the attending facts and circumstances, more so, with the Onset of Pandemic Covid-19, preventing further follow up action. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the petitioner having made a fervent request for condonation of delay in accepting the return, preventing cancellation of registration. The order dated 30th July, 2019 passed by the respondent no.3, namely the Joint Commissioner of State Taxes, Munger Circle, Munger is quashed with the petitioner s registration restored, with a further direction to the respondent no.2, namely The Principal Secretary-cum- Commissioner, Department of State Taxes, Government of Bihar, Patna to finalize the petitioner s assessment and/or pass appropriate orders, in accordance with law. Petition allowed.

Summary

Issues:
Challenge to cancellation of registration under Bihar Goods and Services Tax Act, 2017 - Violation of principles of natural justice - Restoration of registration - Condonation of delay in filing returns - Quashing of ex-parte order.

Detailed Analysis:

1. Cancellation of Registration and Violation of Principles of Natural Justice:
The petitioner sought relief against the cancellation of registration under the Bihar Goods and Services Tax Act, 2017. The Joint Commissioner of State Taxes, Munger Circle, Munger had cancelled the registration citing non-appearance and non-submission of a reply to the show cause notice. The High Court noted that the order of cancellation was non-speaking and lacked clarity on the reasons for the cancellation. The court emphasized that the authority failed to consider the contents of the show cause notice and the petitioner's response, thereby violating the principles of natural justice. The order was deemed cryptic and liable to be quashed due to its penal and pecuniary consequences.

2. Restoration of Registration and Condonation of Delay:
The petitioner had a history of timely compliance with filing returns and paying dues through a tax consultant. However, due to unforeseen circumstances, certain returns were not uploaded in 2019. Despite filing the pending returns with late fines and discharging tax liabilities, the registration was cancelled. The court acknowledged the petitioner's efforts to rectify the situation and highlighted the need for condonation of delay, especially considering the impact of the Covid-19 pandemic. The authority was directed to restore the petitioner's registration and proceed with finalizing assessments in accordance with the law.

3. Quashing of Ex-parte Order and Relief Granted:
In light of the procedural irregularities and failure to adhere to natural justice principles, the High Court quashed the ex-parte order of cancellation and granted the relief sought by the petitioner. The order dated 30th July, 2019, passed by the Joint Commissioner of State Taxes was set aside, and the registration was restored. The Principal Secretary-cum-Commissioner, Department of State Taxes, Government of Bihar, Patna, was directed to complete the petitioner's assessment and issue necessary orders.

4. Conclusion:
The High Court allowed the writ petition, emphasizing the importance of procedural fairness and the need for authorities to consider the circumstances leading to non-compliance before taking punitive actions. The issue of delay in filing returns was closed, and the petitioner's registration was reinstated with a directive for assessment finalization. The interlocutory application, if any, was disposed of accordingly.