Rupak Modak vs. The Union Of INDIA And Others

Held

The Court held that the impugned Order of Cancellation of Registration dated 05.06.2024 was liable to be set aside and quashed. The Court found that the Proper Officer had failed to apply his mind to the relevant facts, particularly the filing of all pending GSTR-3B returns by the petitioner up to February 2024. The Court noted that the cause of action for the SCN, which was the non-filing of returns for a continuous six-month period prior to 29.06.2020, was no longer in existence when the impugned order was passed nearly four years later. The Court also observed that the impugned order was not a speaking order and did not conform to the prescribed procedure, as it incorrectly referred to a reply from the petitioner that was not filed. The Court acknowledged the delay in the petitioner approaching the Court but held that the vulnerability of the SCN and the cancellation order due to statutory breaches outweighed the delay. The Court directed the Proper Officer to proceed strictly in terms of Rule 22 of the CGST Rules to pass an appropriate order within one month, either in FORM GST REG-9 or FORM GST REG-20.

Facts

The petitioner, Rupak Modak, proprietor of Economic Solution, challenged the cancellation of his GST registration by an order dated 05.06.2024. The cancellation stemmed from a Show Cause Notice (SCN) dated 29.06.2020, alleging non-furnishing of returns for a continuous period of six months. The petitioner contended that the SCN did not specify a date for personal hearing and that the impugned order was passed arbitrarily without application of mind. He submitted that after the SCN, he filed all pending GSTR-3B returns up to February 2024, rendering the original cause of action for cancellation non-existent by the time the order was passed nearly four years later. The respondents argued that the petitioner's failure to file returns for six months was his default and that he filed returns only after the stipulated period.

Key Issues

1. Whether the impugned Order of Cancellation of GST Registration dated 05.06.2024, passed by the Proper Officer, is arbitrary and without application of mind, contrary to the principles of natural justice and fair play, particularly in light of the petitioner filing all pending returns before the order was passed? (Question of law and mixed fact and law, turning on Section 29(2)(c) and Rule 22 of the CGST Rules, 2017). Petitioner's arguments: The petitioner argued that the cancellation order was passed without due application of mind because the Proper Officer failed to consider that all pending returns had been filed by the time the order was issued. He contended that the cause of action for the SCN, which was non-filing of returns for a continuous six-month period prior to 29.06.2020, no longer existed by 05.06.2024. Furthermore, the petitioner pointed out that the SCN did not mention a date for personal hearing, and the impugned order incorrectly stated that it was passed after examining the petitioner's reply dated 30.06.2020, despite no such reply being filed. Respondents' arguments: The respondents argued that the default of not filing returns for a continuous period of six months was attributable to the petitioner. They stated that the petitioner did not submit the returns within the stipulated period after the SCN and only submitted them thereafter.