S .K. Enterprises A Partnership Firm Having Its Registered Office At Janki Asthan vs. The State Of Bihar

Facts

The petitioner, S.K. Enterprises, a partnership firm, had its GST registration cancelled by the Joint Commissioner of State Tax, Sitamarhi, Bihar, via an order dated February 5, 2019. This cancellation followed a show-cause notice to which the petitioner had responded. The petitioner appealed this order, but the appeal was dismissed by the Additional Commissioner of State Tax, Tirhut Division (Appeal), Muzaffarpur, Bihar, on February 23, 2022, solely on the grounds of delay in filing the appeal. The petitioner argued that the cancellation order was non-speaking and violated principles of natural justice. The petitioner had been regularly filing returns and depositing dues since 2017, but due to issues with uploading returns for certain periods, which were beyond their control, the problem surfaced in 2019. The petitioner requested condonation of delay in filing returns.

Held

The Court held that the order dated February 5, 2019, passed by the Joint Commissioner of State Tax, Sitamarhi, Bihar, cancelling the petitioner's registration, was non-speaking and cryptic, failing to refer to the show-cause notice and the petitioner's response. This violated the principles of natural justice. Consequently, the Court quashed this order. The Court also quashed the appellate order dated February 23, 2022, which dismissed the petitioner's appeal on the sole ground of delay. The Court found that the authorities ought to have condoned the delay in filing returns, given the circumstances, including the fact that the delay was beyond the petitioner's control and the onset of the Covid-19 pandemic. The petitioner's registration was restored. The Court directed the Principal Secretary-cum-Commissioner, Department of State Taxes, Government of Bihar, to finalize the petitioner's assessment and pass appropriate orders in accordance with law. The issue of delay in filing returns was expressly stated to remain closed and not be raised again by the respondents. The ratio decidendi is that orders impacting civil and penal consequences must be speaking orders, adhere to natural justice, and authorities should consider condoning delays in filing returns when circumstances warrant, especially when the delay is beyond the assessee's control.

Key Issues

1. Whether the order cancelling the petitioner's GST registration, passed by the Joint Commissioner of State Tax, Sitamarhi, Bihar, on February 5, 2019, is a speaking order and complies with the principles of natural justice, particularly in light of Section 29 of the Bihar Goods and Services Tax Act, 2017? 2. Whether the appellate authority, the Additional Commissioner of State Tax, Tirhut Division (Appeal), was justified in dismissing the petitioner's appeal solely on the ground of delay, without considering the merits of the case, given the circumstances surrounding the delay in filing returns? Petitioner's Arguments: The petitioner contended that the order of cancellation was non-speaking, cryptic, and did not refer to the show-cause notice or their response, thus violating principles of natural justice. They argued that the delay in uploading returns was beyond their control and that the authorities ought to have condoned the delay, especially considering the onset of the Covid-19 pandemic. They relied on the fact that they had been regular in filing returns and depositing dues since 2017. Revenue's Arguments: The revenue's arguments are not explicitly recorded in the judgment beyond the submission made by learned Standing Counsel-11 that the issue of delay in filing returns would remain closed.