Eficaz Project Limited Liability Partnership Through Its Partner vs. Commissioner Uttarakhand State GST Commissionerate Dehradun

Held

The Court held that the impugned order of cancellation of registration dated July 12, 2021, suffers from a violation of statutory provisions. Firstly, the Court acknowledged the petitioner's argument that the proper officer becomes functus officio after the expiry of the 30-day period stipulated in Rule 22(3) for deciding a cancellation application. Secondly, and more critically, the Court found that Section 29(2) of the CGST Act mandates that the proper officer shall not cancel the registration without giving the person an opportunity of being heard. The impugned order was passed without providing any such prior show cause notice or opportunity of hearing to the petitioner. Therefore, the cancellation order was found to be statutorily bad in law due to the non-compliance with the mandatory procedural requirement of providing an opportunity of hearing. The Court quashed the impugned order and remitted the matter back to the respondent No. 2 for reconsideration after providing an opportunity of hearing to the petitioner, with a direction to decide the matter within 30 days from the date of service of the order.

Facts

The petitioner, Eficaz Project Limited Liability Partnership, filed an application for cancellation of its GST registration on May 30, 2020. The petitioner contended that under Rule 22(3) of the Uttarakhand Goods and Services Tax Rules, 2017, the proper officer was required to decide such an application within 30 days. As no decision was taken within this period, the petitioner argued that the proper officer became functus officio. Furthermore, the petitioner argued that even if a decision was to be taken after the 30-day period, Section 29(2) of the Central Goods and Services Tax Act, 2017, mandates an opportunity of hearing, which was not provided before the impugned cancellation order dated July 12, 2021, was passed.

Key Issues

1. Whether the proper officer becomes functus officio and loses jurisdiction to pass an order on a GST registration cancellation application if no decision is taken within the 30-day period stipulated in Rule 22(3) of the Uttarakhand Goods and Services Tax Rules, 2017? 2. Whether the cancellation of GST registration is statutorily invalid if an opportunity of hearing, as mandated by Section 29(2) of the Central Goods and Services Tax Act, 2017, is not provided to the registered person, especially when the cancellation order is passed after the expiry of the period prescribed for deciding the cancellation application? Petitioner's Arguments: The petitioner argued that the 30-day period under Rule 22(3) is mandatory, and upon its expiry without a decision, the officer loses jurisdiction. They further contended that Section 29(2) mandates a hearing before cancellation, and its absence renders the order bad in law. They relied on the provisions of Section 29(2) and Rule 22(3). Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or respondents.