Sumtinath Trading Private Limited vs. Union Of INDIA Thr Central Govt. And Anr

Held

The Court held that there was a failure of natural justice. While the Petitioner was not entirely blameless for not filing a timely reply, the impugned remarks/cancellation order did not take cognisance of the Petitioner's physical reply filed on November 2, 2023, which was submitted before the portal endorsement on January 10, 2024. The Court found that the cancellation of registration visits the Petitioner with serious civil consequences, particularly given its business of importing and exporting diamonds. To meet the interests of justice, the Court set aside the impugned remark/cancellation order. The second Respondent was directed to consider the Petitioner's reply dated November 2, 2023, and decide the show-cause notice dated June 8, 2023, afresh, providing the Petitioner with a personal hearing. The Petitioner undertook not to utilize input tax credit until the show cause notice is disposed of. The exercise was to be completed within three months of the Petitioner paying costs of Rs. 50,000/- to Tata Memorial Hospital. All contentions on merits were left open.

Facts

The Petitioner, Sumtinath Trading Private Limited, filed a writ petition challenging the cancellation of its GST registration. The Assistant Commissioner of CGST & CE issued a show-cause notice on June 8, 2023, proposing cancellation and scheduled a hearing for June 15, 2023. The Petitioner claims it could not file an electronic reply and submitted a physical reply on November 2, 2023. The Petitioner stated it heard nothing further and filed the writ petition challenging the show-cause notice. The Respondents' reply revealed an endorsement on the portal on January 10, 2024, indicating registration cancellation. The Petitioner was granted leave to amend the petition to challenge this endorsement. The Court noted the lack of a formal order or communication of cancellation to the Petitioner.

Key Issues

1. Whether the impugned endorsement/remark on the department's portal, indicating cancellation of GST registration, constitutes a valid and speaking order, and whether its communication to the Petitioner was proper, considering the Petitioner's claim of a failure of natural justice? - Petitioner's argument: The Petitioner contended that the portal endorsement was not a proper order and that despite filing a physical reply, no cognisance was taken, leading to a failure of natural justice. They argued that the cancellation order, if any, was not communicated properly. - Revenue's argument: The Revenue argued that the Petitioner was not entirely diligent, having failed to file a reply by the scheduled hearing date and only submitting a physical reply later. They also relied on the portal screenshot as evidence of cancellation. 2. Whether the Petitioner was afforded a proper opportunity to be heard before the cancellation of its GST registration?