M/S Servotech INDIA Limited And R.K. Madhani And Co. (J.V.) vs. The State Of Bihar

Held

The Court held that the order dated October 7, 2021, cancelling the petitioner's GST registration was non-speaking and cryptic, violating the principles of natural justice. The authority failed to refer to the contents of the show cause notice and the petitioner's response, making the reason for cancellation undecipherable. The Court found that the petitioner had been diligently filing returns and depositing dues since 2018, and the non-uploading of returns for certain periods was attributable to the Covid-19 pandemic, a cause beyond the petitioner's control. Consequently, the Court quashed the cancellation order and restored the petitioner's registration. The Court further 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 issue of delay in filing returns was explicitly stated to remain closed and not be raised again by the respondents.

Facts

The petitioner, M/s Servotech India Limited and R.K. Madhani and Co. (J.V.), filed a writ petition challenging an order dated October 7, 2021, passed by the Joint Commissioner of State Taxes, Shahabad Circle Arrah, District Bhojpur. This order cancelled the petitioner's GST registration under Section 29 of the Bihar Goods and Services Tax Act, 2017. The cancellation order, referencing a show cause notice dated September 2, 2021, stated that no reply was submitted. However, the petitioner claimed to have submitted a reply on October 30, 2021. The cancellation order determined no amounts payable for tax, interest, penalty, or others. The petitioner argued that the order was non-speaking, cryptic, violated principles of natural justice, and entailed penal and pecuniary consequences. The petitioner also stated that since 2018, they had been filing returns and depositing dues, but due to the Covid-19 pandemic, returns for certain periods were not uploaded, a cause beyond their control.

Key Issues

1. Whether the order dated October 7, 2021, cancelling the petitioner's GST registration under Section 29 of the Bihar Goods and Services Tax Act, 2017, is a speaking order and complies with the principles of natural justice? Petitioner's arguments: The petitioner contended that the cancellation order was non-speaking and cryptic, failing to refer to the show cause notice and the petitioner's response thereto. This violation of natural justice principles rendered the order liable for quashing, especially given the penal and pecuniary consequences. The petitioner also argued that the non-uploading of returns was due to the Covid-19 pandemic, a factor beyond their control. Revenue's arguments: The revenue, represented by the Standing Counsel, did not dispute the facts regarding the pandemic's impact and agreed that the issue of delay in filing returns should not be raised again.