Kokkans Trading Co vs. State Of Karnataka

Held

The Court held that the impugned order dated 27.07.2021 (Annexure-F) rejecting the petitioner's application for revocation of GST registration cancellation was passed without providing a sufficient or reasonable opportunity, including a personal hearing, to the petitioner. The Court adopted a justice-oriented approach, recognizing the petitioner's contention that due to COVID-19 pandemic and unavoidable circumstances, they sought revocation and an opportunity for personal hearing. Therefore, the Court found it just and appropriate to set aside the impugned order at Annexure-F. The matter was remitted back to the respondent for reconsideration afresh, with a direction to provide an opportunity of personal hearing to the petitioner and to consider any pleadings or documents submitted by the petitioner within eight weeks. The ratio decidendi is that denial of a personal hearing and adequate opportunity to present one's case, especially when supported by bonafide reasons and requests, renders an order arbitrary and liable for setting aside.

Facts

The petitioner, Kokkans Trading Co., represented by its proprietor Mohammed Ali N., filed a writ petition challenging an order dated 20.05.2021 (Annexure-A) by the Assistant Commissioner, LGSTO – 300, Mysuru, cancelling its GST registration (No.ZA2905210330703). The petitioner had submitted a reply to a show-cause notice dated 27.06.2020. Subsequently, the petitioner applied for revocation of the cancellation on 23.05.2021. The respondent issued another show-cause notice dated 24.06.2021 regarding the rejection of the revocation application. The petitioner requested a personal hearing, but the respondent passed an order dated 27.07.2021 (Annexure-F) rejecting the revocation application without providing a sufficient opportunity or a personal hearing. The petitioner contended that these orders were arbitrary and bad in law.

Key Issues

1. Whether the impugned order dated 27.07.2021 (Annexure-F) rejecting the petitioner's application for revocation of GST registration cancellation is arbitrary and bad in law for want of a reasonable opportunity and personal hearing, as contemplated under the relevant provisions of the GST Act and Rules? The petitioner argued that despite submitting a reply to the initial show-cause notice and subsequently requesting a personal hearing for their revocation application, the respondent proceeded to reject the revocation without affording a proper opportunity. The petitioner contended that the orders were arbitrary and bad in law due to the denial of a personal hearing and sufficient opportunity to present their case, especially considering the circumstances cited for the initial non-compliance. The respondents argued that there is no merit in the petition and it is liable to be dismissed.