J.N. Lighting INDIA LLP vs. Union Of INDIA

Held

The Court held that the impugned orders, dated 09.10.2023 (cancellation of GST registration) and 26.02.2024 (rejection of revocation application), were bad in law as they did not set out the reasons for cancellation. The requirement of recording reasons is well-settled, and the Petitioner's submissions were not adequately considered, violating principles of natural justice. The Court relied on its own previous decisions, including G.B. Traders vs. Union of India, to support the necessity of recording reasons. The show-cause notice dated 7th November 2024 (likely a typo in the judgment, referring to the notice for revocation rejection) was also quashed. The Court quashed the impugned orders and the show-cause notice dated 7th February 2024. The proceedings were remanded to the Original/Adjudicating Authority to issue a fresh show-cause notice within two weeks. A personal hearing was to be granted to the Petitioner within two weeks thereafter, followed by a reasoned order. The determination was to be completed within three months. If a fresh show-cause notice was not issued within the stipulated period, the Petitioner's GST registration would stand restored. All contentions were expressly kept open.

Facts

The Petitioner, J. N. Lighting India LLP, is challenging the cancellation of its GST registration. The Petitioner was summoned under Section 70 of the CGST Act in December 2018 and submitted documents. Subsequently, a pre-show cause notice was issued on August 28, 2023, proposing a demand, to which the Petitioner replied. The authorities acknowledged tax liabilities were paid, but a show-cause notice for retrospective cancellation of GST registration was issued on September 16, 2023. An order cancelling the registration from December 11, 2017, was passed on October 9, 2023. An application for revocation was filed and subsequently rejected on February 26, 2024, after a show-cause notice for rejection was issued. A separate show-cause notice under Section 63 was also issued on February 7, 2024, due to the cancellation.

Key Issues

1. Whether the order of cancellation of GST registration dated 09.10.2023 and the order rejecting the revocation application dated 26.02.2024 are bad in law for not considering the Petitioner's submissions and violating principles of natural justice, particularly the right to be heard, as per Section 29 of the CGST Act, 2017? 2. Whether the show-cause notice dated 07.02.2024 under Section 63 of the CGST Act, 2017, issued as a consequence of the cancellation of GST registration, is liable to be quashed and set aside? Petitioner's Arguments: The Petitioner contended that the impugned orders were passed without considering their submissions and without granting an adequate opportunity of being heard, thus violating principles of natural justice. They relied on the High Court's decision in Kishore Nichani Vs. Union of India, which held that GST registration should not be cancelled without providing a hearing. The Petitioner argued that the retrospective cancellation was illegal and sought quashing of the cancellation order, revocation rejection order, and the Section 63 show-cause notice, requesting a fresh hearing. Revenue's Arguments: The learned Addl. G.P. fairly submitted that the proceedings could be remanded back to the Original/Adjudicating Authority for a fresh hearing and a reasoned order.