2023 (8) TMI 582 - HC - GST

Maintainability of petition - principles of natural justice - It is contended that a separate notice affording an opportunity is not required in the case of a change of officer - Cancellation of registration of petitioner - HELD THAT - In the case on hand admittedly there has been no hearing by the Officer who issued Ext.P2 order. Nor was the petitioner put on notice about such an order being proposed. In Anantha Naganna 1969 (9) TMI 27 - ANDHRA PRADESH HIGH COURT the Court was considering a case of levy of penalty under the Income-tax Act. That was a case where there was a change of the Income-tax Officer regarding which the assessee had no intimation. The provision of law which was considered was Section 28(3) - Considering the said provision the Court held that it is obligatory on the part of the authorities imposing a penalty to hear and give a reasonable opportunity to the assessee before an order imposing penalty is passed. Regarding the question of whether the succeeding Officer should hear the assessee Section 5(7)(c) of the Act contains a specific provision that if an Income-tax Authority is succeeded by another authority the succeeding authority may continue the proceeding from the stage where it was left by his predecessor - The Court after taking note of Section 28 and Section 5(7)(c) held that unless the assessee is put on notice regarding the change of Officer he does not even get an opportunity to demand a re-hearing or re-opening. It was hence found that it is inherent in such circumstances that the succeeding Officer should inform the assessee about the proposal to continue the proceedings. The statutory provision in the case on hand is a little different. In the case referred to above which arose under the Wealth Tax Act and Income-tax Act the emphasis was only on the opportunity of being heard to be given to the assessee before an order of penalty is issued under Section 28(3) of the Income Tax Act. Under Section 29(2) of the GST Act the proviso also mentions that the proper Officer shall not cancel the registration without giving an opportunity of being heard which is in the nature of an embargo on the officer. The requirement that the succeeding Officer should put the assessee on notice is thus better emphasised by the usage of the words proper Officer in the proviso to Section 29(2). The necessary implication is that the proper officer has to hear the concerned person before cancelling the registration which would mean that the assessee is put on notice by the succeeding officer also. The petitioner is entitled to relief in this writ petition. The writ petition is allowed.

Summary

Issues:
The issues involved in the judgment are the cancellation of registration under the Goods and Service Tax Act without providing an opportunity for a hearing.

Cancellation of Registration without Hearing:
The petitioner, a Private Limited Company providing architectural services, faced cancellation of registration under the GST Act due to default in filing returns. The petitioner claimed the default was not wilful and took steps to regularize the returns upon realizing the cancellation in 2021. The petitioner contended that the cancellation order (Ext.P2) was issued without a hearing, which is a violation of Section 29(2) of the Act requiring the proper officer to provide an opportunity of being heard before cancellation. The petitioner also raised concerns about the absence of the Document Identification Number (DIN) in Ext.P2.

Proper Officer's Discretion and Requirement of Hearing:
The petitioner argued that the proper officer, as per the Act, has discretion in cancelling registration but is mandated to provide a hearing before doing so. The petitioner highlighted that the successor officer who issued Ext.P2 did not conduct a hearing or provide notice to the petitioner, which is essential for a fair procedure. The petitioner cited legal precedents emphasizing the necessity of giving an opportunity of being heard before taking such actions.

Legal Precedents and Interpretation of Statutory Provisions:
The court referred to previous judgments under the Income-tax Act and Wealth Tax Act, emphasizing the importance of providing an opportunity for a hearing to the assessee before making decisions like cancellation or imposing penalties. The court analyzed the statutory provisions under the GST Act, particularly Section 29(2), and concluded that the proper officer must hear the concerned person before cancelling registration. The court held that the petitioner was entitled to relief as Ext.P2 order was quashed, and the petitioner's registration was treated as not cancelled due to the procedural violations.