2022 (12) TMI 958 - HC - GST

Cancellation of registration of petitioner - rejection on the ground of delay - opportunity of hearing not provided - principles of natural justice - HELD THAT - The appeal has been rejected on the date of its filing by a computer generated order whereby the reason shown is delay in submission of appeal has not been discussed by the first appellate authority in rejecting the appeal, nor any opportunity was provided to assessee to appear before the appellate authority and put forward his case. This Court finds that when the taxing authorities are dealing with the small traders/businessman, they should bear in mind that they are not very well educated, and well versed with the technicalities of law and procedure. They have to take help of legal world and sometime it is not possible for them to get best of legal services and there are certain lapses in compliance of formalities at their end - this Court does not hold brief for the wrong doers but only cautions the officers of the State, that when a new taxing regime has been enforced, which is only five years old, such drastic step of cancellation of registration should be avoided to the maximum extent, and if a trader or businessman is ready to comply the provisions of the Acts and Rules, the authorities may let of the traders with certain minor penalties such as imposition of fine, without taking drastic measure of cancelling his registration. The appellate authority is loathed with more responsibility, as it is a quasi judicial authority and acts as a Court, and while dealing with an appeal it should follow the principle of natural justice and before deciding and taking any decision on the appeal at least the assessee or his counsel should be heard - In the present case the appeal was filed by the assessee with delay alongwith delay condonation application on 30.03.2022. On the very same day by a computer generated order the appeal was rejected with the endorsement delay in submission of appeal . The appellate authority should follow the principle of natural justice by affording opportunity of hearing to the assessee before taking any decision. The appeal should not be dismissed without due consideration of the ground taken in the appeal and the delay condonation application - this Court finds that the order passed by the first appellate authority, which is a cyclostyled order, is unsustainable in the eyes of law and same is hereby set-aside. The matter is remitted to the first appellate authority to decide the appeal afresh after affording due opportunity of hearing to the petitioner - Writ petition stands partly allowed.

Summary

Issues:
1. Appeal against the order of cancellation of registration due to delay in filing.
2. Compliance with the statutory period under Section 107 of the Act of 2017.
3. Lack of discussion on reasons for appeal rejection by the first appellate authority.
4. Consideration of natural justice principles in appellate proceedings.
5. Impact of cancellation of registration on tax compliance and business operations.
6. Responsibilities of taxing authorities in dealing with small traders and businessmen.
7. Need for sensitivity and patience in cancellation of registration decisions.
8. Importance of avoiding drastic measures like cancellation of registration for minor violations.
9. Role of appellate authority as a quasi-judicial body in ensuring fair proceedings.

Analysis:
1. The petitioner filed a writ petition challenging the order of cancellation of registration and the rejection of the appeal by the first appellate authority. The cancellation was based on non-filing of returns for six months, leading to the appeal being dismissed due to delay. The petitioner argued that the delay was due to unavoidable conditions, emphasizing the statutory period under Section 107 of the Act of 2017.

2. The High Court noted that the appeal was rejected on the date of filing without a detailed discussion on the reasons for dismissal. The Court highlighted the objective of the Act of 2017 to streamline taxation and emphasized the need for fair treatment of traders to ensure tax compliance. The Court cautioned against mechanical orders and stressed the importance of natural justice principles in appellate proceedings.

3. Recognizing the impact of cancellation of registration on tax evasion and business operations, the Court urged taxing authorities to be patient and supportive, especially when dealing with small traders who may lack legal knowledge. The Court emphasized the role of officers in facilitating business operations and minimizing unemployment, corruption, and crime that could result from abrupt cancellations.

4. The judgment underscored the appellate authority's duty to act as a quasi-judicial body, ensuring fair hearings and due consideration of appeal grounds and delay condonation applications. The Court set aside the order of the first appellate authority, directing a fresh consideration of the appeal with proper opportunity for the petitioner to present their case. The Court stressed the need for a balanced approach, avoiding drastic measures like cancellation of registration for minor violations.