In a significant ruling, the Madras High Court has held that the order for cancelling the GST registration must be a speaking order and the discretion provided to the department in such cases shall not be used blatantly to violate the principles of natural justice.
The petitioner, B.C.Mohankumaris a Sole Proprietor of BCVM Traders. The petitioner challenged an order dated 13.05.2022 rejecting his application for registration under the provisions of the Central Goods and Service Tax Act, 2017 on the ground that it is cryptic and entirely non-speaking.
Allowing the petition, Justice Anita Sumanth has observed that “an order of this nature is indefensive insofar as it is non-speaking, arbitrary and evidently has not taken into account the explanation furnished by the petitioner. Learned counsel for the respondent refers to Rule 9(4), particularly the deployment of the word ‘may’ herein, that according to him, grants discretion to the authority to assign reasons.”
“As the evident, the word ‘may’ only refers to the discretion to reject and not to blatantly violate the principles of natural justice. If the assessing authority is inclined to reject the application, which he is entitled to, he must assign reasons for such objection and adhere to proper procedure, including due process,” the Court said.
Quashing the order, the Court held that “In light of the above discussion, the impugned order is set aside. Let the petitioner be heard on the objection raised and orders be passed on the application for registration dated 13.05.2022 within a period of four (4) weeks from today. This writ petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed.”
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