Mukesh Kumar vs. The Union Of INDIA
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The petitioner, Mukesh Kumar, is challenging an order dated 14.10.2019 that cancelled his GST registration. The petitioner contends that the order is non-speaking and lacks reasons for the cancellation. The State submitted that the Assessing Officer used form GST REG-19. The Court observed that while GST REG-19 has a specific column for reasons, the Assessing Officer appeared to believe that no reasons were necessary if the assessee did not appear or file an objection. The Court noted the absence of any stated reason for the cancellation of registration.
Held
The Court held that the impugned order cancelling the petitioner's GST registration suffers from the same illegality as pointed out in the case of Manoj Kumar Sah, specifically being a non-speaking and cryptic order. The Court found that the order at Annexure-1 stated absolutely no reason regarding the cancellation of registration, thereby violating the principles of natural justice. The Court referred to form GST REG-19, noting that it has a specific column for assigning reasons, which was not utilized. The Court also took note of Notification No. 3 of 2023, which allows for the invocation of cancellation under certain conditions related to failure to file returns under Section 29(2)(b) or (c) of the CGST Act, provided returns are filed and taxes, interest, penalty, and late fees are paid. The Court set aside the order at Annexure-1 and directed reconsideration of the issue. The writ petition was allowed.
Key Issues
1. Whether the order cancelling the petitioner's GST registration, as contained in Annexure-1 dated 14.10.2019, is a non-speaking order and violates the principles of natural justice, thereby being liable to be quashed, particularly in light of Section 29 of the CGST Act and relevant Rules? Petitioner's arguments: The petitioner argued that the order of cancellation is non-speaking, meaning it does not provide any reasons for the decision. This lack of reasoning violates the principles of natural justice, rendering the order illegal. 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 that do not refer to the show cause notice and response, and where the reason for cancellation is not decipherable, violate natural justice and entail penal and pecuniary consequences. Revenue/State's arguments: The learned counsel for the State submitted that form GST REG-19 has been adopted by the Assessing Officer. The judgment does not record any further arguments from the State.
Sections Cited
Section 29
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 20-04-2023
The petitioner is aggrieved with the cancellation of registration by Annexure-1 order dated 14.10.2019. 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-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 2/4 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 not appear or an objection is not filed, no reasons have to be assigned.
3/4
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-1 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 4/4 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
The writ petition stands allowed. sharun/- (K. Vinod Chandran, CJ) ( Madhuresh Prasad, J) AFR/NAFR NAFR CAV DATE N/A Uploading Date 25.04.2023 Transmission Date N/A
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.