Mahendra Pd. Singh And Bros vs. The Union Of INDIA
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The petitioner, Mahendra Pd. Singh and Bros, a partnership firm, is aggrieved by the cancellation of its GST registration, as per an order dated 23.02.2021 (Annexure P/1). The petitioner filed an appeal against this order, but it was rejected due to delay. The petitioner then filed a writ petition before the High Court. The petitioner argued that the order of cancellation was non-speaking and lacked reasons. The revenue contended that the Assessing Officer adopted form GST REG-19. The judgment notes that the Bihar Goods and Services Taxes Rules, 2017, mandate specific columns in GST REG-19 for assigning reasons, which were absent in the impugned order.
Held
The Court held that the order dated 23.02.2021 cancelling the petitioner's GST registration was a non-speaking order, as it provided no reasons for the cancellation. This violated the principles of natural justice, as established by a previous Division Bench judgment in Manoj Kumar Sah versus The State of Bihar and Anr. The Court found that the Assessing Officer appeared to be under the mistaken belief that no reasons need to be assigned if the assessee does not appear or file an objection. The ratio decidendi is that an order cancelling GST registration must be speaking and provide reasons, even if the assessee fails to respond to a notice, to comply with natural justice. The Court set aside the impugned order and directed reconsideration of the issue. Additionally, the Court noted Notification No. 3 of 2023, which allows for a period up to 30.06.2023 for revocation of cancellation for failure to file returns under Section 29(2)(b) or (c), subject to conditions like filing pending returns and making payments.
Key Issues
1. Whether the order cancelling the petitioner's GST registration, dated 23.02.2021, is a non-speaking order and violates principles of natural justice, thereby warranting quashing? This issue turns on the interpretation and application of principles of natural justice and the requirements of a speaking order in the context of GST registration cancellation. Petitioner's arguments: The petitioner contended that the order of cancellation was non-speaking, meaning it did not provide any reasons for the decision. They argued that this lack of reasoning violates the principles of natural justice, making the order illegal. They relied on the judgment in Manoj Kumar Sah versus The State of Bihar and Anr. (C.W.J.C. No. 18307 of 2022) which held similar orders to be cryptic, non-speaking, and violative of natural justice. Revenue's arguments: The learned counsel for the State submitted that the form GST REG-19 had been adopted by the Assessing Officer. The judgment does not record any further specific arguments from the revenue side regarding the non-speaking nature of the order or the violation of natural justice.
Sections Cited
Section 29(2), Section 29(2)(b), Section 29(2)(c)
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 12-05-2023 The petitioner is aggrieved with the cancellation of registration by Annexure- P/1, order dated 23.02.2021. An appeal was filed which was delayed, which also stood rejected. Insofar as the Bihar Goods and Services Tax Act is concerned, now there is no Tribunal constituted for the State.
In such circumstances, we have looked at the order at 2/4 Annexure- P/1, especially since the learned counsel for the petitioner has argued that it is a non-speaking order. We see from the order that there is no reason stated as to why the cancellation was ordered and not even the subject of the notice is referred to in the order.
It is the submission of the learned counsel for the State that the form GST REG-19 has been adopted by the Assessing Officer.
We extract form GST REG-19:-
As we see from the Bihar Goods and Services Taxes Rules, 2017, GST REG-19 has a specific column where reasons have to be assigned. However, the Assessing Officer seems to be 3/4 laboring under the belief that when an assessee does not appear or an objection is not filed, no reasons have to be assigned.
We cannot countenance the said order, especially when there is absolutely no reason stated regarding the cancellation of registration.
We also notice the judgment of another Hon'ble Division Bench of this Court passed in Manoj Kumar Sah versus The State of Bihar and Anr. in C.W.J.C. No. 18307 of 2022, wherein it has been stated so:- " It cannot be disputed that with the passing of the said order, petitioner is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non- speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. "
The impugned order in the instant writ petition also suffers from the very same illegality which has been pointed out by the Division Bench. In such circumstances, we set aside the order dated 23.02.2021 and direct reconsideration of the issue.
In this context, we also notice that notification No. 3 of 2023 has been brought in by the Central Government on the recommendations of the G.S.T. Council wherein if the 4/4 cancellation has been effected for failure to file returns under clause (b) or clause (c) of Sub-section (2) of Section 29, there is a further period allowed up to 30.06.2023, wherein the registered person can apply for revocation of cancellation. This is also subject to the condition that the return should be filed up to the effective date of cancellation of registration and the payment of tax, interest, penalty and late fee in respect of such returns have also been made. The assessee would also be entitled to avail of the said remedy if the cancellation has been effected under clause (b) or clause (c) of Sub-section (2) of Section 29. 10. The writ petition stands allowed.
Raj kishore/ Shyam Bihari/- (K. Vinod Chandran, CJ) (Madhuresh Prasad, J) AFR/NAFR CAV DATE Uploading Date 16.05.2023. Transmission Date
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.