2024 (11) TMI 1207 - HC - GST

Challenge to remarks/order annexed to the Respondents reply - confusion regarding cancellation of GST registration order - violation of principles of natural justice - HELD THAT - There is no evidence of any proper order of cancellation or in any event, communication of this order to the Petitioner. Since the portal refers to remarks, it is possible that the Petitioner was confused about whether this would constitute an order or in any event, a speaking order. The show cause notice dated 8 June 2023 required the Petitioner to file a reply and attend the personal hearing on 15 June 2023. The Petitioner did neither. It was only in November that the Petitioner filed a reply in physical format, adding that it could not have been uploaded to the Respondent s portal earlier - The impugned remarks take no cognisance of the Petitioner s reply filed in the physical format. Since the impugned remarks were uploaded only on 10 January 2024, cognisance should have been taken of the Petitioner s reply. Accordingly, there is a failure of natural justice. The costs must be paid to the Tata Memorial Hospital within four weeks from today, and proof of payment/receipt must be produced before the second Respondent within four weeks. Upon receipt of such proof, the second Respondent must fix a date for personal hearing of the Petitioner/its representative and dispose of the show cause notice dated 8 June 2023 by passing a reasoned order and communicating it to the Petitioner. The notice regards personal hearing should be served on the Petitioner by e-mail and not by simply indicating it on the portal - If the costs are not paid within four weeks from today, then this Petition will be deemed to have been dismissed with Rs. 10,000/- again payable to Tata Memorial Hospital.

Summary

Issues: Failure of natural justice in cancellation of GST registration, Petitioner's claim of confusion regarding cancellation order, Failure of Petitioner to file a reply and attend personal hearing, Setting aside cancellation order and directing fresh consideration, Payment of costs to Tata Memorial Hospital.

Analysis:

The High Court entertained the Petitioner's challenge against the cancellation of their GST registration due to a perceived failure of natural justice. The Petitioner was issued a show-cause notice but faced difficulties in filing a reply electronically. Despite submitting a physical reply later, the portal displayed remarks of cancellation without proper communication or a formal order to the Petitioner. The Court acknowledged the Petitioner's confusion regarding the status of the remarks and emphasized the importance of natural justice in such matters. However, the Court also noted the Petitioner's delay in responding to the initial notice, highlighting a lack of diligence on their part.

The Court recognized the significant civil consequences of the registration cancellation on the Petitioner's diamond import-export business. In the interest of justice, the Court set aside the cancellation order and directed the second Respondent to reconsider the show-cause notice afresh, taking into account the Petitioner's reply. The Court mandated a personal hearing for the Petitioner within three months, subject to the payment of costs to Tata Memorial Hospital. The Court specified the payment details and timeline for the costs, emphasizing the importance of proof of payment to proceed with the hearing process. The Court also required the second Respondent to provide necessary documents to the Petitioner for a fair and effective personal hearing.

Failure to pay the costs within the stipulated timeline would result in the dismissal of the Petition, with additional costs payable to Tata Memorial Hospital. The Court left all contentions on merits open, as the judgment focused on procedural aspects rather than the substantive issues of the case. Ultimately, the Court made the rule absolute to the extent of setting aside the cancellation order, directing a fresh consideration, and imposing costs on the Petitioner.