M/S.Shree Siddivinayak Publications vs. The Joint Commissioner

Held

The High Court set aside both the order-in-appeal dated August 17, 2022, and the order dated October 29, 2021, cancelling the petitioner's GST registration. The Court remanded the matter back to the Superintendent of Central Tax (2nd respondent) to pass a fresh order in accordance with the law. This decision was based on the principle that it would be just and proper to give the petitioner a fresh opportunity of hearing, as the cancellation of GST registration adversely affects its business operations. The Court acknowledged that the issue of cancellation of GST registration had been dealt with in similar writ petitions. During the fresh hearing, the petitioner would be permitted to furnish the required returns as provided under the statute. The Court explicitly stated that the matter was disposed of, and there would be no order as to costs. No specific section of the CGST Act was expressly discussed in detail, but the cancellation was under Section 29(3).

Facts

The petitioner, M/s. Shree-siddivinayak Publications (a HUF engaged in newspaper publishing), filed a writ petition challenging the cancellation of its GST registration. The Superintendent of Central Tax (2nd respondent) issued a show cause notice on September 2, 2021, for failure to furnish returns for six continuous months. The petitioner submitted an objection on October 3, 2021, but the 2nd respondent proceeded to cancel the registration on October 29, 2021. The petitioner's appeal to the Joint Commissioner, Appeals-II (1st respondent) was dismissed on August 17, 2022. The petitioner contended that the cancellation order and the appellate order were arbitrary, contrary to GST provisions, and violated principles of natural justice and constitutional rights. The petitioner sought to set aside both orders and restore its GST registration.

Key Issues

1. Whether the cancellation of GST registration by the Superintendent of Central Tax, without adequately considering the petitioner's objections, is arbitrary and contrary to the principles of natural justice, as contemplated under the Central Goods and Services Tax Act, 2017? 2. Whether the appellate authority's dismissal of the petitioner's appeal, upholding the cancellation of GST registration, is sustainable in law, given the petitioner's contention of procedural impropriety and violation of natural justice principles? Petitioner's arguments: The petitioner argued that the cancellation of its GST registration was arbitrary and violated the principles of natural justice because the 2nd respondent did not properly consider its objections. It also argued that the action was contrary to the provisions of the CGST Act, 2017, and violated its constitutional rights under Articles 14, 19(1)(g), and 21. The petitioner relied on the fact that it was continuously in business and sought an opportunity for a fresh hearing. Respondents' arguments: The respondents, through their counsel, supported the orders passed by the GST authorities. The appellate order noted that the petitioner was continuously in business but not filing periodical returns and discharging tax liability. It also stated that the reasons submitted by the petitioner were not sufficient, as taxes were collected from clients but not paid to the exchequer, and returns were not filed in time. The appellate authority found no reason to interfere with the cancellation order, citing Section 29(3) of the CGST Act, 2017, and suggesting an intention to evade tax payment.