The Madras High Court quashed the order cancelling Goods and Service Tax ( GST ) registration without providing an opportunity for a hearing. The respondents are directed to issue a fresh show cause notice under law within three weeks.
Mr V S K Traders & Services, the petitioner challenged an order of cancellation of registration dated 23.01.2023 with effect from 31.12.2022. The petitioner was a registered person under the GST regime. According to the petitioner, the requisite monthly returns were filed regularly until March 2022.
During the Covid-19 pandemic, the petitioner’s business was affected and the petitioner did not have any outward supply for about six months. As the petitioner’s business started improving after the end of the pandemic, it is stated that the petitioner was shocked to be put on notice that the GST registration was cancelled.
Counsel for the petitioner submitted that the show cause notice was uploaded on the GST portal, but was not otherwise communicated to the petitioner. Being a small business person, the petitioner was unaware of the posting of the show cause notice on the portal. Therefore, the petitioner could not reply to the show cause notice.
By inviting my attention to the impugned order, counsel pointed out that the said order was issued mechanically as is evident from the reference to a reply dated 04.10.2022 in the first line followed by the statement in the second line that no reply was given. She also points out that sub-rule (4) of Rule 22 of the CGST Rules enables the authority to drop the proceedings for cancellation if appropriate remedial action is taken by the registered person.
Mr K Mohanamurali accepted the notice on behalf of the respondent. He pointed out that the GST registration of the petitioner was cancelled in terms of Section 29(2)(b) and (c) of the applicable GST Provisions.
The single bench comprising Justice Senthilkumar Ramamoorthy observed that the whole process has been undertaken mechanically. Since such an impugned order has resulted in great prejudice to the petitioner without the petitioner being provided a reasonable opportunity to respond, the impugned order calls for interference.
The respondents are directed to issue a fresh show cause notice under law within three weeks. The petitioner shall file a reply to the show cause notice within two weeks after receipt of the show cause notice. The Court allowed the writ petition by quashing the order cancelling the petitioner’s GST registration.
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