The Kerala High Court in a recent decision quashed cancellation of Goods and Service Tax (GST) Registration on absence of reasonable opportunity of being heard.
The petitioner, M/s Ajit Associates Architectural Consultants Pvt. Ltd, is a Private Limited Company engaged in providing architectural services. It is an assessee under the Goods and Service Tax Act (GST Act for short). They have been filing their returns and paying the tax regularly till August,2017. Thereafter, there has been a default in the filing of returns, which according to the petitioner, was not wilful.
It was submitted that even though the show cause notice issued by Assistant Commissioner GST Department, had been served on the company, the concerned accountant who was dealing with the filing of returns did not bring it to the notice of the management and did not file an effective reply to the show cause. It was stated that the petitioner has since filed returns of the defaulted periods from August 2017 onwards and that the returns have been regularised till February 2021.
The contention is that the succeeding officer, who is the proper officer, has not issued notice to the petitioner or heard them. It is further submitted that what is required is the satisfaction of the officer concerned in order to exercise the discretion to cancel or to not cancel the registration, and hence the person who is passing the order necessarily has to hear the petitioner to arrive at a satisfaction.
In Anantha Naganna Chetty v. The Commissioner of Income Tax, Andra Pradesh, Hydradad, it was observed 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.
A Single Judge Bench of Justice TR Ravi observed 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. The contention of the respondents is that the law only requires a grant of sufficient opportunity, and the petitioner had been put on notice, but he did not choose to give any response. It is hence submitted that since the petitioner Company did not take the opportunity of hearing, they cannot be heard to say that there is a violation of the procedure.”
“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) of the GST Act. 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 Bench concluded.
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