S.K.M. Timber Private Limited vs. Superintendent Of Central Tax Burrabazadeivision Kolkata North CGST And Cx Commissionerate And Orsr

Held

The Court held that the challenge to the show-cause notice dated March 14, 2024, is unsustainable due to the principle of constructive res judicata, as it was not set aside in the previous writ petition (WPA 26343 of 2024). However, the impugned order dated December 9, 2024, is set aside. The Court found that the order failed to deal with the petitioner's reply to the show-cause notice and did not disclose any application of mind or provide reasons for its conclusion, making it a nullity. Additionally, the order was passed by the Superintendent, while the hearing was conducted by the Assistant Commissioner, violating the principle that the adjudicating authority must be the one who hears the parties. The Court rejected the submission for a post-decisional hearing, stating it is not meant for cases where a final order is passed without application of mind and reasons. The adjudicating authority is directed to hear the petitioner again, consider the reply, and pass a fresh order within four weeks. The Court explicitly stated it has not gone into the merits of the case, leaving all points open for the adjudicating authority.

Facts

The petitioner, S.K.M. Timber Private Limited, assails an order dated December 9, 2024, passed by the Superintendent of Central Tax, cancelling its GST registration under Section 29(2)(e) of the CGST Act, 2017. The petitioner had previously challenged a show-cause notice dated March 14, 2024, in WPA 26343 of 2024, which was disposed of by directing the authorities to pass an order within thirty days. Despite this, no order was passed, leading to a contempt petition (CPAN 61 of 2025). This contempt petition directed the Assistant Commissioner to communicate the outcome within seven days. Subsequently, the impugned order was passed by the Superintendent, not the Assistant Commissioner who conducted the hearing. The petitioner argues the show-cause notice lacked material particulars and DIN, and the impugned order was passed without application of mind and by an incompetent authority.

Key Issues

1. Whether the show-cause notice dated March 14, 2024, issued for cancellation of GST registration, is legally sustainable, particularly concerning its lack of material particulars and DIN, and if the challenge to it is barred by constructive res judicata. (Section 29(2)(e) of the CGST Act, 2017). 2. Whether the impugned order dated December 9, 2024, cancelling the petitioner's GST registration, is valid, considering it was passed by an authority different from the one who conducted the hearing and failed to deal with the petitioner's reply or provide reasons. Petitioner's arguments: The petitioner contends that the show-cause notice was vague, lacked a DIN, and was not digitally signed. They argue that the impugned order is bad in law as it was passed by the Superintendent, whereas the hearing was conducted by the Assistant Commissioner, violating the principle that 'one who hears must decide'. Furthermore, the order fails to address the petitioner's reply or provide any reasoning, rendering it a nullity. They also argue that a post-decisional hearing is not appropriate in this case. CGST Authorities' arguments: The CGST authorities submit that the impugned order was passed considering a communication from the Anti-Evasion unit, which indicated fraudulent activities and tax evasion by the petitioner. They argue that the petitioner can at best be given a post-decisional hearing and the order should not be interfered with.