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2025 (3) TMI 1334 - HC - GSTCancellation of GST registration of petiiton without due application of mind - violation of princuples of natural justice - HELD THAT - On perusal of the impugned Order it is evidently clear that the impugned Order is not in conformity with the procedure prescribed in FORM GST REG-19. A speaking order is one which expressly states the reasons for the decision. In other words a speaking order speaks for itself by assigning the reasons behind the conclusion. If an order is passed without giving a reason by the concerned authority then the order is a non-speaking one. Non-speaking order is one which does not provide a clear reason for its decision. The fact that the petitioner-assessee did not submit any Reply to the Show Cause Notice dated 14.11.2023 or did not appear before the Proper Officer when he was called upon to do so does not absolve the Proper Officer from the obligation of passing a speaking order as any order which brings adverse consequence to a person cannot be a mere paper formality. A submission has been made that the writ petition has been preferred with delay as the petitioner has filed the writ petition in February 2025 that is after about one year from the order of cancellation of registration dated 05.02.2024. Although the petitioner has not approached the Court immediately after the order of cancellation of registration this Court is of the considered view that when the extent of vulnerability of the order of cancellation of registration is due to not meeting the statutory prescription of recording reasons is pitted against the delayed approach the vulnerability of the order of cancellation of registration would far outweigh the delayed approach because of its likely adverse affect on a registered person like the petitioner. It is open for the petitioner-assessee to submit a Reply to the Show Cause Notice dated 14.11.2023 showing reason s as to why the GST Registration should not be cancelled in terms of sub-rule 2 of Rule 22 of the CGST Rules read with Section 29 2 c of the CGST Act. In the alternative the petitioner-assessee at the time of and/or instead of replying to the Show Cause Notice served under sub-rule 1 of Rule 22 of the CGST Rules can furnish all the pending returns and make full payment of the tax dues along with the applicable interest late fee and penalty if any. It is therefore observed that it would be open for the petitioner-assessee to avail either of the two options. This Court for ends of justice deems it just and proper to grant a period of one month from today to the petitioner to avail either of the two permissible options. Conclusion - The impugned cancellation order quashed due to its procedural deficiencies and lack of reasoning. The matterias reverted to the stage of issuance of the show cause notice allowing the petitioner to respond or comply with the requirements for revocation of cancellation. Petition allowed by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Procedural Compliance in Cancellation of GST Registration Relevant Legal Framework and Precedents: The CGST Act, 2017 and the CGST Rules, 2017, particularly Section 29(2)(c) of the CGST Act and Rule 22 of the CGST Rules, outline the procedure for cancellation of GST registration. Rule 22 mandates that a proper officer must issue a show cause notice in FORM GST REG-17, and the cancellation order must be issued in FORM GST REG-19, specifying reasons for cancellation. Court's Interpretation and Reasoning: The Court observed that the cancellation order dated 05.02.2024 did not assign any reasons for the cancellation of the petitioner's GST registration. The Court emphasized the requirement for a speaking order, which mandates the recording of reasons to ensure transparency and fairness in administrative actions. Key Evidence and Findings: The impugned order merely referenced the petitioner's lack of response to the show cause notice but failed to articulate specific reasons for the cancellation, violating the procedural requirements. Application of Law to Facts: The Court found that the order did not comply with the statutory requirement of providing reasons, rendering it a non-speaking order. This deficiency indicated a lack of application of mind by the proper officer. Treatment of Competing Arguments: The petitioner's counsel argued that the order was arbitrary and lacked reasoning, while the respondents contended that the petitioner was at fault for not filing returns and not responding to the show cause notice. The Court sided with the petitioner, highlighting the procedural lapses in the cancellation order. Conclusions: The Court concluded that the cancellation order was procedurally flawed and lacked the necessary reasoning, warranting its quashing. 2. Impact of Delay in Filing the Writ Petition Relevant Legal Framework and Precedents: The Court considered whether the delay in filing the writ petition affected the petitioner's right to challenge the cancellation order. Court's Interpretation and Reasoning: The Court acknowledged the delay but emphasized that the procedural deficiencies in the cancellation order outweighed the delay. The Court prioritized the need for adherence to statutory requirements and fair procedure over the timeliness of the petition. Conclusions: The Court held that the delay in filing the writ petition did not preclude the petitioner from challenging the cancellation order due to its procedural inadequacies. SIGNIFICANT HOLDINGS Verbatim Quotes of Crucial Legal Reasoning: "A speaking order is one which expressly states the reasons for the decision. In other words, a speaking order speaks for itself by assigning the reasons behind the conclusion." Core Principles Established: The judgment reinforced the principle that administrative orders affecting rights must be reasoned and comply with statutory procedural requirements. The obligation to provide a speaking order is integral to ensuring fairness and preventing arbitrary administrative actions. Final Determinations on Each Issue: The Court set aside and quashed the impugned cancellation order due to its procedural deficiencies and lack of reasoning. The matter was reverted to the stage of issuance of the show cause notice, allowing the petitioner to respond or comply with the requirements for revocation of cancellation. The Court granted the petitioner a period of one month to either submit a reply to the show cause notice or furnish pending returns and make full payment of tax dues, as appropriate. The proper officer was directed to proceed in accordance with the prescribed procedure and issue an appropriate order within a specified timeframe.
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