2023 (1) TMI 979 - HC - GST

Cancellation of GST number issued to the petitioner - non-speaking order received from the respondent no.2 intimating him that the GST Registration Number is cancelled - Violation of principles of natural justice - HELD THAT - The orders of cancellation of registration which were impugned before the Court were even more glaring which lacked even the basic details. Addressing this issue extensively, the Court had noticed that the respondent authority had failed to extend the sufficient opportunity of hearing before passing the order impugned despite of specific request for adjournment, the order was not only non-speaking but cryptic in nature and the reason for cancellation was not decipherable. On all counts, the respondent authority has failed to adhered to the legal position and therefore held that the basic principles of natural justice is violated and the order needed to be quashed. The Court also reflects that on inquiry made with the learned AGP appearing for the respondent authority as to why such vague show cause notice and vague final orders bereft of any material particulars were being passed, the reply was that on account of the technical glitches in the portal, the department is finding difficult to upload the show cause notice as well as the final order of cancellation of registration contenting all necessary details and information. The Court did not find this to be a valid ground nor a sustainable explanation for the purpose of issuing show cause notices and passing of the order finally cancelling the registration of the persons concerned therefore, it directed the department that till this technical glitches are corrected, the show cause notices to be issued shall be manual/physical containing all material particulars and information to enable the dealer to effectively respond to the same. The very officer instead of realizing that this action on the part of the authority is contrary to the directions issued by this Court way back in the month of February, 2022, reiterates that because of some technical glitches of GST portal, the reply of the notice has not been received from the GST portal. Therefore, he declares that he would initiate the fresh cancellation proceedings manually and after it is found satisfactory on receiving the fresh reply, he would restore the GST number of the dealer. The least that was expected of the officer, on realizing that the initial notice on his part was contrary to the directions issued by this Court, was to express apology for repeating this very act and restoring the GST Number, straightway has sought permission of the Court to initiate a fresh action of cancellation. Assuming that this is an initiative out of his bona fide on realizing the mistake, the tenor of the communication does not reflect anywhere remorse of not following the decision. Assuming that it is not in the hands of the officer concerned to make any amendments and changes in the software or on the portal, the least they could have been done is to follow the directions once having realized the same from the averments of the petition. This writ application is being ALLOWED solely on the ground of violation of the principles of natural justice.

Issues Involved:
1. Legality of the order dated 10.05.2022 canceling the petitioner's GST number.
2. Compliance with principles of natural justice in the issuance of show cause notices and final orders.
3. Technical glitches in the GST portal affecting the due process.
4. Adequacy of reasons provided in the show cause notices and final orders.
5. Remedies and directions to prevent recurrence of similar issues.

Issue-wise Detailed Analysis:

1. Legality of the Order Dated 10.05.2022:
The petitioner challenged the order dated 10.05.2022, issued by the Assistant Commissioner, Ghatak-8, Ahmedabad, canceling the GST number. The petitioner argued that the order was non-speaking and lacked sufficient reasoning, violating the principles of natural justice. The High Court found that the order was indeed non-speaking and cryptic, lacking any specific details or reasons for cancellation, which rendered it illegal and bad in law.

2. Compliance with Principles of Natural Justice:
The Court emphasized that the respondent authority failed to provide a reasonable opportunity of hearing before passing the impugned order. The show cause notices and final orders were devoid of necessary particulars and details, making it impossible for the petitioner to effectively respond. The Court noted that similar issues were addressed in the case of Aggarwal Dyeing and Printing Works vs. State of Gujarat, where the lack of specific details in show cause notices and cryptic final orders were held to violate natural justice principles.

3. Technical Glitches in the GST Portal:
The respondent argued that technical glitches in the GST portal prevented them from receiving the petitioner's reply to the show cause notice. The Court did not accept this as a valid ground for issuing vague notices and passing non-speaking orders. It directed that until the technical glitches are resolved, show cause notices and final orders must be issued manually, containing all necessary details and forwarded by RPAD.

4. Adequacy of Reasons Provided in the Show Cause Notices and Final Orders:
The Court found that the show cause notices and final orders were vague and lacked material particulars. The impugned order dated 10.05.2022 did not provide any reasoning or reference to relevant provisions or rules, making it a complete non-application of mind. The Court highlighted that the respondent authority must ensure that all necessary details and reasons are included in such notices and orders to avoid unnecessary litigation.

5. Remedies and Directions to Prevent Recurrence of Similar Issues:
The Court quashed the impugned show cause notice and order, restoring the petitioner's GST registration. It granted liberty to the respondent to issue a fresh show cause notice with specific reasons and details, providing a reasonable opportunity of hearing to the petitioner. The Court emphasized that the respondent must issue manual notices and orders until the GST portal is updated to address technical glitches. Additionally, the Court imposed a cost of Rs. 25,000 on the department for failing to comply with the Court's previous directions and causing unnecessary litigation.

Conclusion:
The High Court allowed the petition, quashing the impugned show cause notice and order due to violations of natural justice and lack of adequate reasoning. It directed the respondent to issue fresh, detailed notices and orders manually until the GST portal is updated. The Court also imposed a cost on the department for non-compliance with previous judicial directions.

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