Skyscrappers Infracon Private Limited vs. The Assistant Commissioner, Goods And Service Tax, Bhabanipur, Kolkata (South), West Bengal
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The petitioner, Skyscrappers Infracon Private Limited, challenged a show cause notice dated December 2, 2020, issued by the Assistant Commissioner, Goods and Service Tax, Bhabanipur, Kolkata (South) for cancellation of its GST registration. The notice also suspended the petitioner's registration effective from December 2, 2020. The petitioner argued that the suspension was effected without a personal hearing, contrary to Section 29(2) and Rule 21A of the CGST Act, 2017. The petitioner also referred to a subsequent notice dated February 1, 2021, alleging it was also issued unlawfully. The respondents submitted that the hearing provision in Section 29 pertains to cancellation, not suspension, but admitted Rule 21A provided for a hearing prior to suspension. They also stated the February 1, 2021 notice was from Central GST authorities.
Held
The Court held that the suspension of the petitioner's GST registration, as indicated in the show cause notice dated December 2, 2020, was bad in law and set aside. The reasoning was that the suspension was effected without complying with the statutory requirement of a personal hearing, which was mandated by Rule 21A(2) of the CGST Rules, 2017, at the time the notice was issued. Although Rule 21A was amended on December 22, 2020, omitting the hearing requirement for suspension, this amendment was not in effect when the petitioner's registration was suspended on December 2, 2020. The Court explicitly stated it would not adjudicate the cancellation issue, leaving all points in respect thereof open for the concerned authority. The ratio decidendi is that a statutory procedural requirement, such as a personal hearing before suspension of registration, must be complied with at the time of the action, even if the rules are subsequently amended. The Court directed the concerned authority to grant a personal hearing to the petitioner regarding the cancellation issue within three weeks and to issue a specific notice for the hearing date and time.
Key Issues
1. Whether the suspension of the petitioner's GST registration, effective from December 2, 2020, was unlawful for being issued without a prior personal hearing, contrary to Rule 21A(2) of the Central Goods and Service Tax Rules, 2017, read with the second proviso to Section 29(2) of the CGST Act, 2017? Petitioner's contentions: The petitioner argued that the suspension of its GST registration on December 2, 2020, was contrary to Section 29(2) and Rule 21A of the CGST Act, 2017, specifically sub-rule 2 of Rule 21A, which mandates a personal hearing before suspension. No such hearing was provided. The petitioner also contended that a subsequent notice dated February 1, 2021, was issued unlawfully. Revenue/State's contentions: The respondents submitted that the hearing provided in Section 29 of the CGST Act relates to cancellation of registration, not suspension. However, they fairly admitted that Rule 21A provides for a hearing prior to suspension. They also stated that the notice dated February 1, 2021, was issued by Central GST authorities and they were not concerned with it.
Sections Cited
Section 29(2), Rule 21A
AI-generated summary — verify with the full judgment below
OD - 4 BEFORE: The Hon’ble JUSTICE ARINDAM MUKHERJEE Date: 15th February, 2021. Appearance: Mr. Soumyajit Dasgupta, Adv. Mr. Siddhartha Sharma, Adv. Ms. Shalini Basu, Adv. …for the petitioner Mr. Abhratosh Majumder, Ld. AAG. Md. Talay M. Siddiqui, Adv. Mr. Avra Mazumder, Adv. …for the State Mr. Kaushik Dey, Adv. Mr. Tapan Bhanja, Adv. …for the respondent no.2 Ms. Sumitra Das, Adv. …for the respondent no.
The Court : Affidavit-of-service filed in Court today is taken on record. The petitioner has, inter alia, challenged a show cause notice dated 2nd December, 2020 for cancellation of the Goods and Service Tax (GST) registration of the petitioner issued by the Assistant Commissioner, Bhabanipur, Kolkata South (respondent no.1) in Form GST REG-17. By the said notice the petitioner’s registration has also been suspended with effect
2 from 2nd December, 2020. The petitioner says that this notice is contrary to the provision of Section 29(2) and rule 21A of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’). So far as the suspension is concerned sub-rule 2 of rule 21A, according to the petitioner, refers to a personal hearing before the suspension of registration under the second proviso to Section 29(2) of the CGST Act. But no hearing was given to the petitioner before the registration was suspended with effect from 2nd December, 2020. Rule 21A of CGST rules have been amended by notification no.94/2020-Central Tax dated 22nd December, 2020. The hearing which was provided under sub-rule 2 of Rule 21A has been omitted with effect from 22nd December, 2020. Admittedly, when the notice was issued on 2nd December, 2020, the rule 21A was not amended and as such a hearing was required to be given to the petitioner prior to the registration of the petitioner being suspended. The petitioner has also referred to another notice dated 1st February, 2021 and alleges that the same has been also done in an unlawful manner. On behalf of the respondent nos. 1 and 2 it is submitted that the hearing provided in Section 29 is regarding the cancellation and not for suspension but fairly admits that rule 21A provides for a hearing prior to suspension. The notice dated 1st February, 2021 according to the respondent nos.1 and 2 has been issued by the Central GST authorities to which the said respondents are not concerned.
3 It appears from the record that the petitioner has already challenged show cause notice for cancellation of registration dated 2nd December, 2020 by filing reply thereto. This part has to be adjudicated by the concerned authority empowered under the statute in accordance with law. This Court, therefor, does not wish to enter the domain of the authority and leaves all points in respect thereof open. So far as the personal hearing part before suspension is concerned the same is a statutory requirement which having not been complied with, the suspension part as indicated in the show cause notice for cancellation dated 2nd December, 2020 is bad in law and is set aside. The authority concerned is directed to give a personal hearing to the petitioner in terms of Section 29(2) of the CGST Act for the purpose of adjudicating the cancellation issue in terms of show cause notice for cancellation dated 2nd December, 2020. The entire exercise shall be completed within a period of three weeks from date. The authority concerned shall issue a specific notice informing the petitioner about the date and time of hearing well in advance and the petitioner co-operate in the hearing. The concerned officer upon hearing the petitioner shall pass a reasoned order and will be free to pass appropriate orders, if the petitioner does not participate at the hearing. Nothing further remains to be adjudicated in this writ petition, the same is accordingly disposed of.
4 Since I have not called for affidavits, the allegations contained in the petition are deemed to have not been admitted by the respondents. (ARINDAM MUKHERJEE, J.) sp3
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.