M/S Balaji Dream Homes vs. Union Of INDIA

Held

The Court held that the show cause notice dated December 6, 2023, was procedurally flawed as it fixed the personal hearing date (January 3, 2024) before the expiry of the thirty-day period granted for submitting a reply. This dual fixation violated the principles of natural justice by not affording the petitioner adequate time to prepare and submit a response. Consequently, the ex-parte order of cancellation dated January 8, 2024, which was based on this flawed notice, was also deemed unsustainable. The Court directed the Proper Officer to grant the petitioner one opportunity to submit their response to the show cause notice. If, after considering the response, the Proper Officer still intended to pass an adverse order, a personal hearing would be granted. The entire exercise was to be completed within three months from the date of the order. The petitioner undertook to file their response within three weeks.

Facts

The petitioner, M/s Balaji Dream Homes, filed a writ petition challenging a show cause notice dated December 6, 2023, issued by the Superintendent, Central Goods and Service Tax, Patna West, for cancellation of its GST registration. The petitioner also challenged the ex-parte order dated January 8, 2024, passed by the Principal Secretary cum Commissioner, Department of State Taxes, Government of Bihar, cancelling its GST registration. The petitioner contended that the show cause notice directed a reply within thirty days but fixed a personal hearing date before the expiry of this period. The petitioner also claimed to have filed returns and paid taxes up to January 2024, and was unable to file returns thereafter due to the cancellation. The revenue argued that the petitioner was irregular in filing GST returns since May 2018, and failed to appear for the personal hearing on January 3, 2024, and did not file any reply.

Key Issues

1. Whether the show cause notice dated December 6, 2023, and the subsequent order for cancellation of GST registration dated January 8, 2024, are liable to be quashed for violating the principles of natural justice, specifically concerning the opportunity to respond to the show cause notice and the timing of the personal hearing, as per Section 29 of the CGST Act, 2017 and relevant rules? Petitioner's arguments: The petitioner argued that the show cause notice was flawed because it provided a thirty-day period to reply but scheduled the personal hearing before the expiry of this period, thereby denying a sufficient opportunity to respond. The petitioner also claimed to be unaware of the notice on the GST portal and that their application for revocation was rejected on limitation grounds. Revenue's arguments: The revenue contended that the petitioner was irregular in filing GST returns for a continuous period of six months, which led to the issuance of the show cause notice. They asserted that the petitioner was given an opportunity for personal hearing on January 3, 2024, but failed to appear and did not file any reply, thus the order does not suffer from a violation of natural justice.