M/S Shambhu Traders vs. The State Of Bihar

Facts

The petitioner, M/s Shambhu Traders, is challenging the cancellation of its GST registration, as per an order dated 09.05.2022 (Annexure-2). The petitioner filed an appeal against this order, but it was rejected due to delay. The petitioner argues that the order of cancellation is non-speaking. The respondents, represented by the State, submit that the Assessing Officer used the prescribed form GST REG-19. The Court notes that the Bihar Goods and Services Taxes Rules, 2017, mandate specific columns for reasons in GST REG-19, which were not filled. The absence of reasons in the cancellation order is the primary contention.

Held

The Court held that the order cancelling the petitioner's GST registration (Annexure-2) is a non-speaking order and suffers from illegality. The Court observed that Form GST REG-19, as per the Bihar Goods and Services Tax Rules, 2017, has a specific column for assigning reasons, which was not utilized by the Assessing Officer. The Court found that the Assessing Officer appeared to believe that no reasons need to be assigned if the assessee does not appear or file an objection. This was found to be unacceptable, especially when the order provided absolutely no reason for the cancellation. The Court referred to a previous judgment by another Division Bench in Manoj Kumar Sah versus The State of Bihar and Anr., which held that a non-speaking, cryptic order that does not state the reason for cancellation violates principles of natural justice and must be quashed due to its penal and pecuniary consequences. The Court found the impugned order suffered from the same illegality. Consequently, the Court set aside the order at Annexure-2 and directed reconsideration of the issue. The Court also noted Notification No. 3 of 2023, which allows for revocation of cancellation under certain conditions up to 30.06.2023 for failures under Section 29(2)(b) or (c), provided returns are filed and dues are paid.

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 Bihar Goods and Services Tax Act, 2017 and Rule 21 of the Bihar Goods and Services Tax Rules, 2017? Petitioner's Arguments: The petitioner contends that the order of cancellation of registration (Annexure-2) is non-speaking, as it fails to provide any reasons for the cancellation. This violates the principles of natural justice, rendering the order illegal. They rely on the judgment in Manoj Kumar Sah versus The State of Bihar and Anr. to support their claim that a non-speaking order with penal and pecuniary consequences must be quashed. Revenue's Arguments: The learned counsel for the State submits that the Assessing Officer adopted the form GST REG-19. The judgment does not record any further arguments from the revenue regarding the non-speaking nature of the order or the specific reasons for cancellation.