M/S Jyoti Electricals vs. The Union Of INDIA
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The petitioner, M/s Jyoti Electricals, a sole proprietorship firm, filed a writ petition challenging the cancellation of its GST registration, as per the order dated 11.07.2022 (Annexure-2). The petitioner had filed an appeal against this order, which was pending before the appellate authority. The petitioner argued that the cancellation order was non-speaking, meaning it did not provide any reasons for the cancellation or refer to the subject of the notice. The revenue contended that the Assessing Officer had adopted the prescribed form GST REG-19 for the cancellation. The Court noted that GST REG-19 has a specific column for reasons, which the Assessing Officer failed to utilize.
Held
The Court held that the order cancelling the petitioner's GST registration (Annexure-2) was a non-speaking order, failing to provide any reasons for the cancellation and not even referring to the subject of the notice. This illegality was found to be similar to the one observed in the case of Manoj Kumar Sah versus The State of Bihar and Anr. The Court emphasized that the Assessing Officer seemed to believe that no reasons were required if the assessee did not appear or file an objection, which is contrary to the requirements of form GST REG-19 and the Bihar Goods and Services Taxes Rules, 2017. The Court quashed the impugned order and directed reconsideration of the issue. Additionally, the Court noted Notification No. 3 of 2023, which allows for the invocation of cancellation under specific conditions for failure to file returns under Section 29(2)(b) or (c), providing a further period up to 30.06.2023 for such applications, subject to filing returns and making payments.
Key Issues
1. Whether the order cancelling the petitioner's GST registration, as contained in Annexure-2, is a non-speaking order and thus violates principles of natural justice, turning on Section 29(2) of the CGST Act and Rule 21 of the CGST Rules. Petitioner's Arguments: The petitioner contended that the order of cancellation of registration was non-speaking, lacking any reasons for the decision and failing to refer to the subject of the notice. This, they argued, violated the principles of natural justice, especially since cancellation has significant civil and penal consequences. Revenue's Arguments: The revenue submitted that the Assessing Officer had followed the prescribed form GST REG-19. They did not explicitly argue that the order was speaking or that reasons were provided, but rather that the prescribed form was used.
Sections Cited
Section 29(2), Rule 21
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 25-04-2023
The petitioner is aggrieved with the cancellation of registration by Annexure- 2 order dated 11.07.2022. An appeal was filed which is pending before the appellate authority.
We have looked at the order at Annexure- 2, 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.
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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 not appear or an objection is not filed, no reasons have to be assigned.
We cannot countenance the said order, especially when 3/4 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- 2 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 cancellation has been effected for failure to file returns under clause (b) or clause (c) of Sub-section (2) of Section 29, there is 4/4 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.
rajkishore/- (K. Vinod Chandran, CJ) (Madhuresh Prasad, J) AFR/NAFR CAV DATE Uploading Date 28.04.2023. 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.