Swasti Rubber Agency vs. The State Of Tripura And Ors.

Held

The Court directed Respondent No.4, the Superintendent of State Tax, Government of Tripura, to consider the explanation submitted by the petitioner in response to the show-cause notice within a period of two weeks from the date of receipt of the order. The Court further stipulated that if the explanation was not considered and final orders were not passed within the stipulated time, the suspension order would stand revoked. The Court's reasoning was based on ensuring that the petitioner's explanation was duly considered and that the business was not kept in limbo indefinitely due to inaction by the authorities. The ratio decidendi is that while tax authorities can issue show-cause notices and take interim measures, they must adhere to principles of natural justice by considering the taxpayer's response within a reasonable timeframe, failing which interim measures should be lifted.

Facts

The petitioner, Swasti Rubber Agency, challenged a show-cause notice dated 19.09.2022 for cancellation of its GST registration. The notice alleged claiming excess Input Tax Credit (ITC) and ineligible ITC during the year 2019-2020. The petitioner's grievance was that along with the show-cause notice, an order of suspension of registration effective from 19.09.2022 was passed without affording an opportunity of hearing or assigning reasons. The petitioner had submitted replies to the show-cause notice on 11.11.2022 and 23.11.2022, but no decision was communicated, and the registration remained suspended, causing business disruption. The petitioner contended that the authorities issued the notice and suspension order without assigning reasons and in violation of natural justice.

Key Issues

1. Whether the suspension of GST registration was validly passed without affording an opportunity of hearing to the petitioner, thereby violating the principles of natural justice? 2. Whether the show-cause notice for cancellation of GST registration was issued without adequate reasons, necessitating its revocation? Petitioner's Arguments: The petitioner argued that the simultaneous issuance of the show-cause notice for cancellation and the order of suspension of registration, without providing an opportunity for hearing or assigning specific reasons, violated the principles of natural justice. They also contended that despite submitting replies to the show-cause notice, the respondent authorities failed to communicate any decision and kept the registration suspended, paralyzing their business. The petitioner relied on the principle that any adverse action must be preceded by a fair hearing. Respondents' Arguments: The learned Government Advocate appearing for the respondents prayed for the dismissal of the writ petition.