Shri Nitendra Kumar vs. The Chief Commissioner, Central GST And Central Excise, Ranchi Zone
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The petitioner, Shri Nitendra Kumar, a contractor, is aggrieved by the order dated 03.02.2021 (Annexure-3) cancelling his GST registration. He filed an appeal which was rejected due to delay. The petitioner contends that the cancellation order is non-speaking. The State submitted that the Assessing Officer adopted Form GST REG-19. The Court noted that Form GST REG-19 has a specific column for reasons, which was not filled. The Court observed that the Assessing Officer seemed to believe no reasons were required if the assessee did not appear or file an objection.
Held
The Court held that the order cancelling the petitioner's GST registration (Annexure-3) is a non-speaking order and suffers from illegality, as it fails to provide any reasons for the cancellation. This violates the principles of natural justice, as established in the case of Manoj Kumar Sah. The Court found that Form GST REG-19, despite having a specific column for reasons, was not utilized to assign any justification for the cancellation. The Assessing Officer's apparent belief that reasons are not required when an assessee does not appear or file an objection was found to be unsustainable. Consequently, the Court set aside the impugned order and directed reconsideration of the issue. The Court also noted Notification No. 3 of 2023, which allows for a further period up to 30.06.2023 for registered persons to apply for revocation of cancellation if it was for failure to file returns under Section 29(2)(b) or (c), subject to conditions.
Key Issues
1. Whether the order cancelling the petitioner's GST registration is a non-speaking order, thereby violating principles of natural justice, as per Section 29(2) of the CGST Act and Section 29(2) of the BGST Act? Petitioner's Arguments: The petitioner argued that the order of cancellation of registration is non-speaking, meaning it does not provide any reasons for the decision. This lack of reasoning violates the principles of natural justice. The petitioner 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 that non-speaking and cryptic orders violating natural justice principles are liable to be quashed. Revenue's Arguments: The State submitted that the Assessing Officer adopted Form GST REG-19. The judgment does not record any further arguments from the revenue regarding the non-speaking nature of the order or the violation of natural justice.
Sections Cited
Section 29(2)
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 26-04-2023
The petitioner is aggrieved with the cancellation of registration by Annexure-3 order dated 03.02.2021. 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 Annexure-3, especially since the learned counsel for the petitioner has argued that it is a non-speaking order. We see 2/4 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 laboring under the belief that when an assessee does 3/4 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 at Annexure-3 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 4/4 recommendations of the G.S.T. Council wherein if the 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 invocation 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.
SUMIT/- (K. Vinod Chandran, CJ) ( Madhuresh Prasad, J) AFR/NAFR NAFR CAV DATE NA Uploading Date 28.04.2023 Transmission Date NA
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.