GST Registration cancellation order set aside due to lack of reasoning

Last updated: 18 January 2023

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Quick Summary

The Patna High Court has overturned an order cancelling a taxpayer's GST registration. The court found the cancellation order to be a "non-speaking order" because it failed to provide any reasons for the cancellation and did not consider the taxpayer's reply to a show cause notice. This lack of reasoning was deemed a violation of natural justice principles. Consequently, the court ordered the restoration of the taxpayer's GST registration.

Court :
Patna High Court

Brief :
The Hon'ble Patna High Court in the matter of Manoj Kumar Sah v. The State of Bihar through Commissioner of State GST &Anr. [Civil Writ Jurisdiction Case No.18307 of 2022 dated January 10, 2023] set aside the order of cancellation of the Goods and Service Tax ("GST") Registration of the assessee and held that the cancellation of the GST Registration through a non-speaking order without mentioning the grounds for such cancellation is cryptic in nature and violates the principles of natural justice.

Citation :
Civil Writ Jurisdiction Case No.18307 of 2022 dated January 10, 2023

The Hon'ble Patna High Court in the matter of Manoj Kumar Sah v. The State of Bihar through Commissioner of State GST &Anr. [Civil Writ Jurisdiction Case No.18307 of 2022 dated January 10, 2023]set aside the order of cancellation of the Goods and Service Tax ("GST") Registration of the assessee and held that the cancellation of the GST Registration through a non-speaking order without mentioning the grounds for such cancellation is cryptic in nature and violates the principles of natural justice.

Facts

Mr. Manoj Kumar Sah ("the Petitioner") filed the writ petition against the order of cancellation of the GST Registration. The Petitioner contended that his GST registration was cancelled without considering his reply to the Show Cause Notice ("SCN") and without granting him the opportunity of personal hearing. Further, no reason for cancellation of the GST Registration was provided in the order.

Issue

Whether the GST Registration can be cancelled without mentioning any reasons?

Held

The Hon'ble Patna High Court held as under:

The Joint Commissioner of State Tax ("the Respondent") did not refer to the Petitioner's reply to the SCN while passing the order as a result of which the Petitioner would become liable to both civil and penal consequences.
The order being a non-speaking order was cryptic in nature. Further, the reason for cancellation was not decipherable from the order. Thus, the order violates the principles of natural justice.

Therefore, the Hon'ble Patna High Court set aside the order of cancellation of the GST Registration and directed the Respondent to restore the GST Registration of the Petitioner.

FAQ :

The Patna High Court set aside an order cancelling a taxpayer's GST registration, stating it was a non-speaking order lacking sufficient reasoning.

The order was invalid because it was a non-speaking order, meaning it did not provide specific grounds for cancellation and failed to consider the taxpayer's submitted reply.

In this case, the principles of natural justice were violated because the taxpayer was not given a clear reason for the cancellation and their response was not considered.

The taxpayer's GST registration was restored by the court's order.

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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