Srinivasa Enterprises vs. Assistant Commissioner Of State Tax

Held

The Court held that the order of cancellation of registration dated May 9, 2024, was in violation of the principles of natural justice. The Court found that the petitioner was not provided with a copy of the inspection report dated March 14, 2024, nor was a personal hearing granted, despite the petitioner's specific request for both. The Court observed that the cancellation order, which stated grounds of fraud, willful mis-statement, or willful suppression of facts, appeared to be a proforma statement without proper consideration or analysis of the facts of the case, rendering it an order without reasons. This failure to provide an opportunity to be heard and to supply adverse material violated the principles of natural justice. The Court allowed the writ petition, setting aside the order of cancellation. The authorities were given the liberty to initiate fresh proceedings for cancellation, if deemed fit, strictly in accordance with law and adhering to the principles of natural justice. No order as to costs was made.

Facts

The petitioner, Srinivasa Enterprises, a trader of iron and steel scrap, is registered under the APGST Act, 2017, CGST Act, 2017, and IGST Act, 2017. The petitioner was served with a show cause notice for cancellation of registration and an order of suspension of registration dated March 7, 2024. Following a physical inspection of the petitioner's premises on March 14, 2024, a report was submitted, which was also used against the petitioner. The petitioner, unaware of the inspection report's contents and having conducted the inspection in his absence, requested a copy of the report and an opportunity for personal hearing via a representation dated March 27, 2024. However, the order of cancellation of registration was issued on May 9, 2024, without providing the petitioner with a copy of the inspection report or granting a personal hearing.

Key Issues

1. Whether the order of cancellation of registration dated May 9, 2024, passed by the Assistant Commissioner of State Tax, is in violation of the principles of natural justice, specifically the right to a hearing and the right to be provided with adverse material, as contemplated under the APGST Act, 2017, CGST Act, 2017, and IGST Act, 2017? Petitioner's contentions: The petitioner argued that the impugned order of cancellation was passed in violation of the principles of natural justice because they were not granted an opportunity of hearing and were not supplied with a copy of the inspection report dated March 14, 2024, which was crucial to the cancellation proceedings. The petitioner contended that the order of cancellation, which cited fraud, willful mis-statement, or willful suppression of facts, was a proforma statement lacking specific factual analysis and therefore constituted an order without reasons. Respondent's contentions: The judgment does not record any specific contentions made by the respondents.