2023 (1) TMI 791 - HC - GST

Cancellation of GST registration of the petitioner - non-speaking order - violation of principles of natural justice - HELD THAT - The least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non-speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. The order dated 12/09/2019 passed by the respondent no.2, namely the Joint Commissioner of State Tax, Madhubani, Bihar is quashed with the petitioner s registration restored, with a further direction to the respondent no.1, namely The State of Bihar through Commissioner of State GST, New Secretariat, Patna to finalize the petitioner s assessment and/or pass appropriate orders, in accordance with law. Petition allowed.

Summary

Issues Involved:
1. Cancellation of GST registration by Joint Commissioner of State Tax under Section 29 of Bihar Goods and Services Tax Act, 2017 without proper justification.
2. Violation of principles of natural justice in the cancellation order.
3. Petitioner's plea for restoration of GST registration and assessment finalization by the State of Bihar.

Analysis:
1. The petitioner sought relief for the restoration of their GST registration, as it was cancelled by the Joint Commissioner of State Tax, Madhubani, Bihar, under Section 29 of the Bihar Goods and Services Tax Act, 2017. The cancellation order lacked justification and failed to consider the contents of the show cause and the petitioner's response, rendering it non-speaking and cryptic. The order did not provide a clear reason for the cancellation, violating principles of natural justice. The court acknowledged the penal and pecuniary consequences faced by the petitioner due to the cancellation and deemed the order unjust and in need of quashing.

2. The High Court, in its judgment delivered by the Chief Justice, emphasized the importance of adhering to principles of natural justice in administrative decisions, especially those with significant implications on individuals or entities. The court highlighted the necessity for authorities to provide reasoned and justifiable orders, considering the rights and interests of the affected parties. In this case, the lack of proper reasoning and failure to refer to the show cause contents and response led to a violation of natural justice, warranting the cancellation order to be set aside.

3. Consequently, the court allowed the writ petition, quashed the order dated 12/09/2019 cancelling the petitioner's GST registration, and directed the restoration of the registration. Additionally, the State of Bihar through the Commissioner of State GST, New Secretariat, Patna, was instructed to finalize the petitioner's assessment and issue appropriate orders in accordance with the law. The court explicitly closed the issue of delay in filing returns, preventing its reoccurrence, as stated by the respondent's representative during the proceedings. The judgment provided comprehensive relief to the petitioner, ensuring the restoration of rights and proper assessment procedures moving forward.

Conclusion:
The judgment by the Patna High Court, delivered by the Chief Justice, addressed the unjust cancellation of GST registration, emphasizing the importance of natural justice and reasoned administrative decisions. By quashing the cancellation order, restoring the petitioner's registration, and directing the State of Bihar to finalize assessment procedures, the court upheld principles of fairness and legality in administrative actions. The detailed analysis and comprehensive relief provided in the judgment signify a significant legal precedent in safeguarding individual rights in matters of tax registration and assessment.