M/S Avinash Kumar Dhiraj, Sultanpur Devi Asthan, Near Larj Building, Danapur, Patna vs. The State Of Bihar

Held

The Court held that the order dated 20.01.2022 passed by the Joint Commissioner of State Tax, Danapur Circle, Patna, cancelling the petitioner's GST registration, was in violation of the principles of natural justice. The Court found the order to be non-speaking and cryptic, failing to refer to the show cause notice or the petitioner's response, making the reason for cancellation undecipherable. Consequently, the Court quashed the said order. The Court also directed the restoration of the petitioner's GST registration. Furthermore, the Court directed the Commissioner, Department of State Taxes, Government of Bihar, Patna, to finalize the petitioner's assessment or pass appropriate orders in accordance with the law. The Court noted that the issue of delay in filing returns would not be raised again, as stated by the revenue's counsel. The appellate order rejecting the revocation application was implicitly set aside by quashing the original cancellation order.

Facts

The petitioner, M/s Avinash Kumar Dhiraj, challenged an order dated 20.10.2022 by the Additional Commissioner of State Tax (Appeals), Patna West Division, which rejected their application for revocation of a cancellation order. The original cancellation order, dated 20.01.2022, was passed ex-parte by the Joint Commissioner of State Tax, Danapur Circle, Patna, cancelling the petitioner's GST registration. The petitioner argued that this cancellation was done without a proper show cause notice, opportunity to reply, or a hearing. The petitioner sought quashing of both the cancellation order and the appellate order, restoration of their GST registration, de-freezing of their bank account, and a stay on coercive recovery actions. The Joint Commissioner's order stated that no reply was submitted and the petitioner did not appear for hearing, despite the petitioner claiming to have filed a reply dated 02/01/2022.

Key Issues

1. Whether the ex-parte order dated 20.01.2022 passed by the Joint Commissioner of State Tax, Danapur Circle, cancelling the petitioner's GST registration, violated the principles of natural justice by failing to provide a proper opportunity for reply and hearing, thereby requiring it to be quashed under Section 29 of the Bihar Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner contended that the cancellation order was passed without affording them a proper opportunity to file a reply to the show cause notice and without granting a hearing, thus violating principles of natural justice. They argued that the order was non-speaking and cryptic. They also stated that the authority ought to have condoned the delay in filing returns, especially given the circumstances post-Covid-19 pandemic, and that their fervent request for condonation was not considered. Revenue's arguments: The judgment records that the learned Standing Counsel for the respondents stated that the issue of delay in filing returns shall remain closed and not be raised again. No other specific arguments from the revenue regarding the validity of the cancellation order or the appellate order were explicitly detailed in the judgment.