M/S Fast Track Services vs. The Union Of INDIA
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The petitioner, M/s Fast Track Services, is challenging an order dated 27.12.2019 that cancelled its GST registration. The petitioner filed an appeal against this order, which is currently pending before the appellate authority. The petitioner argues that the cancellation order is non-speaking, meaning it does not provide any reasons for the cancellation. The revenue contends that the Assessing Officer used Form GST REG-19, which is the prescribed format. However, the Court observed that even within this form, specific columns for reasons are present, but the order under challenge failed to provide any justification for the cancellation.
Held
The Court held that the order dated 27.12.2019 cancelling the petitioner's GST registration is a non-speaking order and suffers from illegality. The Court found that the order provided no reasons for the cancellation and did not even refer to the subject of the notice. This violates the principles of natural justice, as established by a previous Division Bench judgment of the same Court in Manoj Kumar Sah versus The State of Bihar and Anr. The Court noted that Form GST REG-19 has specific columns for assigning reasons, and the Assessing Officer appeared to believe that no reasons were required if the assessee did not appear or file an objection. The Court cannot countenance such an order. Consequently, the Court set aside the impugned order and directed reconsideration of the issue. Additionally, the Court referred to Notification No. 3 of 2023, which allows a further 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 returns and making payments.
Key Issues
1. Whether the order cancelling the petitioner's GST registration, dated 27.12.2019, is a non-speaking order violating principles of natural justice, as argued by the petitioner? 2. Whether the Assessing Officer erred in not assigning reasons for the cancellation of registration, even when using Form GST REG-19, as contended by the petitioner? Petitioner's Arguments: The petitioner argues that the order of cancellation is non-speaking and cryptic, failing to refer to the show-cause notice or the petitioner's response, thereby violating principles of natural justice. They rely on the Division Bench 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 illegal due to lack of reasoning and violation of natural justice. Revenue's Arguments: The revenue submitted that Form GST REG-19 was adopted by the Assessing Officer. No specific arguments were recorded in the judgment regarding the revenue's defense against the non-speaking nature of the order.
Sections Cited
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 : 24-04-2023 The petitioner is aggrieved with the cancellation of registration by order dated 27.12.2019. An appeal was filed which is pending before the appellate authority.
We have looked at the order at Annexure-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.
2/4
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 3/4 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 27.12.2019 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 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.
Sujit/- (K. Vinod Chandran, CJ) ( Madhuresh Prasad, J) AFR/NAFR NAFR CAV DATE Uploading Date 27.04.2023 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.