M/S Raj Enterprises vs. Commissioner Commercial And Another

Held

The Court held that the principles of natural justice are fundamental and deeply entrenched in jurisprudence, allowing no light exceptions, especially when an order has far-reaching civil consequences, such as impacting a business's entire operations. The Court found that the first proviso to Section 29(2) of the Act mandates an opportunity of hearing before cancellation of registration. Therefore, the revenue's reliance on Rule 22 of the Rules was deemed misconceived, as the statutory provision dictates the necessity of issuing a show cause notice and affording a due opportunity of hearing. Even if the petitioner had not furnished a reply, the authority was obligated to fix a date and provide a hearing in compliance with Section 29(2). Consequently, the impugned order dated June 29, 2019, was set aside. The petitioner was directed to furnish its reply to the show cause notice dated May 24, 2019, within two weeks, after which the respondent authority was to pass an appropriate order in accordance with law. The issue of service of the notice dated May 24, 2019, was not ruled upon as no counter affidavit was filed.

Facts

The petitioner, M/s Raj Enterprises, challenged an order dated June 29, 2019, issued by respondent no. 2, which cancelled its GST registration under the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner contended that the cancellation order was passed without any prior proceedings, specifically without issuing or serving a show cause notice, calling for a reply, or communicating a hearing date. These facts were brought on record via an amendment application. The revenue argued that the order was appealable and that a show cause notice dated May 24, 2019, uploaded on the GST portal, was visible to the petitioner, negating the need for further hearing opportunity under Rule 22 of the Uttar Pradesh Goods and Services Tax Rules, 2017.

Key Issues

1. Whether the cancellation of GST registration without issuing and serving a show cause notice, or affording an opportunity of hearing, violates the principles of natural justice and statutory provisions? (Section 29(2) of the Act and Rule 22 of the Rules) The petitioner argued that the cancellation order was a nullity as it was passed without adhering to the mandatory procedural requirements of natural justice, namely, issuance of a show cause notice and providing an opportunity of hearing. The petitioner emphasized that such procedural lapses render the order invalid, irrespective of whether a reply was filed. The revenue contended that the show cause notice dated May 24, 2019, uploaded on the GST portal, constituted sufficient notice and that the petitioner's failure to reply absolved the authority of the obligation to grant a further hearing, relying on Rule 22 of the Rules. The revenue also raised the issue of the availability of an alternative appellate remedy.