Jd Enterprises vs. State Of Bihar

Held

The Court held that no case for interference in exercise of its extraordinary writ jurisdiction has been made out. Regarding the issue of natural justice, the Court noted that the show cause notice (Annexure P/6) clearly indicated an opportunity for personal hearing, and while the petitioner submitted written submissions, they did not appear for the personal hearing. The Court found no violation of natural justice as the petitioner was served with a notice to show cause and given an opportunity to defend itself. Concerning the grounds for cancellation, the Court referred to the inspection report (Annexure P/4) which stated that the proprietor was contacted telephonically and provided a different address for the establishment, suggesting concealment. The report also indicated no business activity was found at the establishment, and a small room was taken on rent solely for bill trading, confirmed by the landlord. The Court found the cancellation order to be a reasoned order, citing the findings of the inspection team. The Court concluded that the petitioner's argument that earlier inspections did not find the premises non-existent was not sufficient to overcome the findings of the later inspections. Therefore, the writ application was liable to fail.

Facts

The petitioner, JD Enterprises, challenges an order dated 28.06.2024 by the Joint Commissioner of State Tax, Aurangabad, cancelling its GST registration. The cancellation was based on an inspection report by the Deputy Commissioner and Assistant Commissioner, stating the principal place of business was non-functional and non-existent, indicating pseudo-transactions or bill trading. The petitioner argues that previous inspections on 03.08.2021 by other authorities found the premises existent and business activities ongoing, with purchase and sale invoices produced. The petitioner claims the cancellation order was passed arbitrarily, illegally, and without jurisdiction, violating principles of natural justice as no proper hearing was afforded. The petitioner also states that its principal place of business is a small office for conducting business, while coal is stocked and transactions occur at additional places of business, all duly disclosed. The respondents contend that the petitioner was given an opportunity for a personal hearing, which was not availed, and that the inspection reports clearly indicated non-functional business activities and non-existent additional places of business, supporting the cancellation under relevant rules.

Key Issues

1. Whether the order cancelling the GST registration of the petitioner was passed in violation of the principles of natural justice, specifically by not affording a proper opportunity of hearing, as argued by the petitioner? 2. Whether the findings of the inspection reports, particularly regarding the principal place of business being non-functional and non-existent, and the alleged pseudo-transactions/bill trading, are sufficient grounds for cancellation of registration under the Bihar Goods and Services Tax Act, 2017 (BGST Act) and its Rules, as contended by the respondents? 3. Whether the petitioner's argument that previous inspections did not find the premises non-existent and that the current cancellation order is arbitrary and illegal, is sustainable, given the subsequent inspection findings and the respondents' submissions? Petitioner's Arguments: The petitioner argues that the cancellation order is arbitrary, illegal, and without jurisdiction, passed in violation of natural justice as no proper hearing was given. They rely on earlier inspection reports that found their business premises existent and operational. They also contend that the principal place of business is a small office and additional places are for storage and sale, as disclosed in the registration. The petitioner invokes the extraordinary writ jurisdiction of the High Court. Respondents' Arguments: The respondents argue that the petitioner was given an opportunity for a personal hearing, which they failed to avail. They contend that Rule 21(a), (b), and (c) of the BGST Rules are attracted. The respondents assert that inspection reports confirmed the business was non-functional, additional places were non-existent, and pseudo-transactions/bill trading occurred. They argue that the writ court should not interfere as the petitioner had a statutory remedy of appeal under Section 107 of the BGST Act, but since the order was passed after due notice and opportunity, the writ jurisdiction is not warranted.