M/S Randhawa Construction Co. vs. Union Of INDIA

Held

The Court allowed the petition, quashing and setting aside the show cause notice and the order of cancellation of registration. The Court found that the original order of cancellation was cryptic and lacked proper reasoning, thereby violating the principles of natural justice. The Court noted that the revenue authorities had not taken into account the previous judgments of the High Court, specifically Aggarwal Dyeing and Printing Works, which stressed the importance of speaking orders and adequate opportunity of hearing. The Court held that the requirement to record reasons emanates from the broad doctrine of fairness in decision-making. The Court granted liberty to the respondent to issue a fresh notice with particulars of reasons and to provide a reasonable opportunity of hearing to the petitioner, and to pass an appropriate speaking order on merits. The petitioner was given the liberty to respond to the fresh show cause notice. The Court refrained from imposing costs based on an assurance from the revenue that such orders would not be repeated.

Facts

The petitioner, M/s Randhawa Construction Co., a registered firm, challenged the cancellation of its GST registration and the subsequent rejection of its appeal. The cancellation order, dated 09.12.2021, was passed by Respondent No. 4 for non-filing of GSTR-3B returns since February 2021. The petitioner claimed financial difficulties due to a family dispute and the COVID-19 pandemic. The Order-in-Appeal, dated 22.08.2022, passed by Respondent No. 3, rejected the petitioner's appeal as time-barred. The petitioner argued that the original cancellation order was cryptic and lacked proper reasoning, and that it was not afforded a proper opportunity of hearing. The petitioner had paid Rs. 5,24,47,777/- through DRC-03 proceedings.

Key Issues

1. Whether the cancellation of the petitioner's GST registration was valid, considering the alleged lack of proper reasoning and opportunity of hearing in the Order-in-Original dated 09.12.2021, thereby violating principles of natural justice? 2. Whether the Order-in-Appeal dated 22.08.2022, which rejected the petitioner's appeal as time-barred, was justified? Petitioner's Arguments: The petitioner contended that the Order-in-Original was cryptic, providing no specific details or reasons for cancellation, and that it was not given a proper opportunity to be heard. It relied on the High Court's decision in Aggarwal Dyeing and Printing Works V/s. State of Gujarat & 2 others, which emphasized the need for speaking orders and proper hearing. The petitioner also argued that its financial difficulties, exacerbated by the pandemic, prevented timely compliance. Revenue's Arguments: The revenue argued that the petitioner had not filed GSTR-3B returns since February 2021 and did not provide a proper explanation to the show cause notice. It also contended that the appeal was filed after a delay of approximately eight months, and that the petitioner had not discharged its liability or filed due returns until the cancellation. Section 30 of the CGST Act read with Rule 23 was cited.