M/S Shree Bhagwat Estate Developer Private Limited vs. The Commissioner Uttar Pradesh Goods And Service Tax Lucknow And 2 Others

Held

The Court held that the order cancelling the petitioner's GST registration and the subsequent appellate order upholding the cancellation were not justified. The Court reasoned that the petitioner had not been provided with an adequate opportunity to file a reply to the show-cause notice before the cancellation order was passed. The Court also noted the appellate authority's rejection of the appeal solely on the ground of being time-barred without considering the merits. The ratio decidendi is that procedural fairness, including an opportunity to respond to a show-cause notice, is paramount before adverse orders like cancellation of registration are passed. The Court quashed both orders and remitted the matter back to the Assistant Commissioner to decide afresh after the petitioner files its reply within 15 days. The Assistant Commissioner is to consider the reply on merits within one month.

Facts

M/s Shree Bhagwat Estate Developer Private Limited (the petitioner) was granted GST registration. The petitioner, engaged in construction, filed a GSTR-3B for July 2017 declaring zero sales and subsequently failed to file returns for two years. A show-cause notice was issued on September 7, 2019. The petitioner did not file a reply, leading to the cancellation of its GST registration by the Assistant Commissioner on September 19, 2019. The petitioner filed a delayed appeal, which was rejected by the appellate authority on August 25, 2021, as time-barred. The State contended that the petitioner had not commenced business within six months of voluntary registration, as per Section 29(2)(d) of the GST Act.

Key Issues

1. Whether the cancellation of GST registration by the Assistant Commissioner, Sector-9, Uttar Pradesh Goods and Services Tax, Varanasi (A), Varanasi, vide order dated September 19, 2019, was justified, considering the petitioner did not file a reply to the show-cause notice? 2. Whether the rejection of the petitioner's delayed appeal by the appellate authority, vide order dated August 25, 2021, on the grounds of being time-barred, was correct? Petitioner's contention: The petitioner argued that due to the nature of its construction business, commencement of operations might take longer than the period stipulated in the Act, explaining the delay in filing returns. Respondent's contention: The State argued that under Section 29(2)(d) of the Goods and Services Tax Act, the petitioner had not commenced its business within six months of taking voluntary registration, justifying the cancellation.