M/S Mohammad Mumtaj Gouse vs. The Union Of INDIA
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The petitioner, M/s Mohammad Mumtaj Gouse, a sole proprietorship firm, filed a writ petition challenging the cancellation of its GST registration. The cancellation was ordered by the Assistant Commissioner, CGST and CX, Purnea Division, vide an order dated 20.04.2022, which is Annexure-2 to the petition. The petitioner contended that the order of cancellation was a non-speaking order, lacking any reasons for the decision. The respondents, represented by the Additional Solicitor General, submitted that the Assessing Officer adopted the form GST REG-19. The Court examined the form and the relevant rules, noting that GST REG-19 has a specific column for assigning reasons, which was not utilized.
Held
The Court held that the order of cancellation of GST registration (Annexure-2) is a non-speaking order, as it fails to provide any reasons for the cancellation. This violates the principles of natural justice, especially since such an order can lead to civil and penal consequences for the assessee. The Court found that the Assessing Officer did not assign any reasons, despite the form GST REG-19 having a specific column for reasons. The Court relied on a previous judgment of a Division Bench of the same High Court in Manoj Kumar Sah v. The State of Bihar and Anr., which held that a non-speaking and cryptic order of cancellation, where the reason is not decipherable, violates natural justice. Consequently, the Court quashed the impugned order at Annexure-2. The Court also noted Notification No. 3 of 2023, which provides a further period for revocation of cancellation for certain defaults, and stated that the petitioner would be entitled to avail this remedy if applicable. The Court directed reconsideration of the issue.
Key Issues
1. Whether the order cancelling the petitioner's GST registration is a non-speaking order violating principles of natural justice, as per Section 29 of the CGST Act, 2017? The petitioner argued that the order of cancellation of registration (Annexure-2) is non-speaking, meaning it does not provide any reasons for the decision. This lack of reasoning, the petitioner contended, violates the principles of natural justice. The petitioner relied on the judgment in Manoj Kumar Sah versus The State of Bihar and Anr. to support the argument that a non-speaking order entailing civil and penal consequences is illegal and needs to be quashed. The respondent (Revenue) submitted that the Assessing Officer adopted the form GST REG-19. The judgment does not record any further specific arguments from the respondent regarding the validity of the order or the petitioner's contentions.
Sections Cited
Section 29
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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 Annexure-2 order dated 20.04.2022. 2. 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.
It is the submission of the learned counsel for the 2/4 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 there is absolutely no reason stated regarding the cancellation 3/4 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 a further period allowed up to 30.06.2023, wherein the 4/4 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.
P.K.P./Anushka (K. Vinod Chandran, CJ) (Madhuresh Prasad, J) AFR/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.