Karnataka HC Set Aside Cancellation of GST Registration Over Absence of Mandatory Hearing Schedule [Read Order]

The High Court of Karnataka held that cancellation of a Goods and Services Tax (GST) registration without specifying the mandatory date and time of personal hearing in the show-cause notice (SCN) violates the statutory safeguard under the Karnataka Goods and Services Tax Act, 2017 (KGST Act). The Court therefore set aside the cancellation order and remitted the matter back for reconsideration.

R. M. Services challenged the cancellation of its GST registration issued by the Assistant Commissioner of Commercial Taxes. The matter began when a SCN proposing cancellation was issued, but it did not specify any date or time for a personal hearing. Despite this omission, the authority proceeded to cancel the registration, and the decision was upheld in subsequent proceedings. Aggrieved by this, the appellant approached the High Court under Article 226 of the Constitution of India, seeking quashing of the cancellation order and restoration of the registration.

The appellant, represented by Pruthviraj P. Hittalamani, argued that the cancellation order was unsustainable as the SCN issued under Section 29 of the KGST Act, 2017 failed to provide a specific date and time for personal hearing. Further, the proviso to Section 29(2) of the KGST Act, 2017 makes such a hearing mandatory before cancellation can be effected. Thus, the absence of this statutory requirement invalidated the entire proceeding and deprived the appellant of a genuine opportunity to be heard.

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A Single Judge Bench of Justice M. Nagaprasanna observed that the issue had already been addressed in detail by a coordinate bench, which held that a SCN for cancellation of registration must mandatorily specify the date and time for personal hearing, in compliance with the proviso to Section 29(2) of the KGST Act, 2017. The Court held that such compliance is not optional and constitutes a statutory right of the assessee.

Since the notice issued to the appellant failed to adhere to this requirement, and the cancellation order did not establish that any meaningful opportunity of hearing was provided, the Court ruled the cancellation to be unsustainable.

The Court allowed the petition, set aside the cancellation order, and remitted the matter to the authority for fresh consideration beginning from the stage of the show-cause notice.

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