Post-Decisional Hearing Cannot Cure Lack of Proper Hearing: Calcutta HC Quashes GST Registration Cancellation by Different Authority [Read Order]

The Calcutta High Court, rejecting the suggestion of the GST ( Goods and Services Tax ) department to provide Post-decisional hearing, said that the same could not be directed by the court and it is not applicable to cases where final order was passed without application of mind.

Justice Om Narayan Rai, while deciding the petition filed by S.K.M. Timber Private Limited, observing the order passed by the GST authorities defied the principle that “an order must be passed by the authority who hears the parties or that one who hears must decide”.

The petitioner challenged the GST order which cancelled its registration under Section 29(2) of the CGST/WBGST Act, 2017. A show cause notice dated March 14, 2024 was issued mentioning cancellation of registration.

It was submitted by the petitioner that they submitted a reply, however no final order was passed. The petitioner approached the high court earlier. Later, in October 2024, the bench directed the department to conclude the proceedings after hearing.

Even after such clear direction, the petitioner said that the department didn’t take any decision on the matter. Thus, the petitioner decided to initiate contempt proceedings. Thereafter, the impugned cancellation of order dated December 9, 2024 was communicated.

The bench noted the petitioner’s submission that while the personal hearing was conducted by the Assistant Commissioner, the final cancellation order was passed by the Superintendent, which itself is against the legal principles.

The GST department, responding to the issue, said that the same was caused due to internal communication issues. The department said they could provide a Post-decisional hearing.

The court, rejecting the department’s submissions, stated that the impugned order was a non-speaking order, containing no reasons or application of mind.

The bench noted that an order without reasons is arbitrary and void since the reasons operate as the "live link" between the facts and the conclusion.

With regards to the post-decisional issue, the court said that “Post-decisional hearing is not to be ordinarily directed by Courts and it is not at all meant for cases like the one at hand where a final order has been passed without any application of mind and without recording any reason. It is well settled that post-decisional hearing does not sub- serve the rules of natural justice and therefore the submission of Mr. Banerjee is not accepted.”

Accordingly the court quashed the GST registration cancellation order and directed the adjudicating authority to hear the petitioner freshly. It was ordered to decide the matter based on the SCN reply filed by the petitioner.