M/S Laxmi Store vs. The State Of Bihar

Facts

The petitioner, M/s Laxmi Store, through its proprietor Raju Kumar, filed a writ petition before the Patna High Court challenging the cancellation of its GST registration. The cancellation order, dated 04.06.2022 and marked as Annexure-3, was issued by the Additional Commissioner of State Tax, Patna East Division. The petitioner argued that the order was non-speaking and lacked any reasons for the cancellation. The State submitted that the Assessing Officer adopted the form GST REG-19. The Court noted that GST REG-19, as per the Bihar Goods and Services Taxes Rules, 2017, has a specific column for assigning reasons, which was not utilized.

Held

The Court held that the order of cancellation of registration at Annexure-3 is a non-speaking order, as it fails to provide any reasons for the cancellation and does not even refer to the subject of the notice. This violates the principles of natural justice. The Court found that the Assessing Officer appeared to believe that if an assessee does not appear or file an objection, no reasons need to be assigned, which is incorrect. The Court referred to its previous judgment in Manoj Kumar Sah, which stated that such an order is cryptic, the reason for cancellation is not decipherable, and principles of natural justice are violated. Consequently, the Court set aside the impugned order at Annexure-3. The Court also noted Notification No. 3 of 2023, which allows a further period up to 30.06.2023 for registered persons to apply for revocation of cancellation if it was for failure to file returns under Section 29(2)(b) or (c), subject to conditions. The writ petition was allowed, and the issue was directed for reconsideration.

Key Issues

1. Whether the order cancelling the petitioner's GST registration, issued by the Additional Commissioner of State Tax, Patna East Division, is a non-speaking order violating principles of natural justice, as argued by the petitioner? 2. Whether the Assessing Officer erred in not assigning reasons for cancellation of registration, despite the format GST REG-19 requiring it, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the cancellation order (Annexure-3) is non-speaking, meaning it does not provide any reasons for the decision. This violates the principles of natural justice. The petitioner relied on a previous judgment of the Patna High Court in Manoj Kumar Sah versus The State of Bihar and Anr. (C.W.J.C. No. 18307 of 2022), which held that a non-speaking and cryptic order of cancellation, without referring to the show cause notice and response, violates natural justice and warrants quashing. Revenue's Arguments: The State submitted that the Assessing Officer adopted the form GST REG-19. The judgment does not record any further arguments from the State regarding the non-speaking nature of the order or the violation of natural justice.