Tvl.Sri Thirumalai Bhagavan Traders vs. The Assistant Commissioner

Held

The Court held that the impugned order cancelling the petitioner's GST registration suffered from a total non-application of mind and a clear violation of the principles of natural justice. The Court noted that while a show cause notice was issued, the impugned order of cancellation was not based on the reason stated in that notice. Crucially, the petitioner had not been given an opportunity to submit an explanation for the grounds on which the cancellation order was ultimately passed. The Court also observed that for the same reason indicated in the show cause notice dated 27.09.2024, an earlier show cause notice dated 23.08.2024 had been issued, and the petitioner's explanation had led to the revocation of the suspension of registration on 26.09.2024. Consequently, the impugned order was set aside. The Court allowed the writ petition with liberty to the respondent to proceed against the petitioner for the reasons indicated in the impugned order, provided a reasonable opportunity is afforded to the petitioner. No order as to costs was made.

Facts

The petitioner, Tvl.Sri Thirumalai Bhagavan Traders, challenged an order dated 10.10.2024 passed by the Assistant Commissioner, Palani II Assessment Circle, cancelling its GST registration (GSTIN/UIN: 33CDMPA4461L1ZI). The petitioner argued that the impugned order was passed without issuing a proper show cause notice for the grounds on which cancellation was ultimately ordered. Previously, a show cause notice dated 23.08.2024 was issued for not carrying on business at the declared place of business, to which the petitioner replied. Subsequently, the respondent revoked the suspension of registration on 26.09.2024. However, a new show cause notice dated 27.09.2024 was issued, and the impugned cancellation order dated 10.10.2024 was based on grounds for which no specific show cause notice was provided, violating natural justice.

Key Issues

1. Whether the impugned order of cancellation of GST registration dated 10.10.2024 is liable to be quashed for violation of the principles of natural justice, specifically for being passed on grounds not communicated to the petitioner via a show cause notice, contrary to Rule 21(a) of the GST Rules? Petitioner's arguments: The petitioner contended that the impugned order was illegal and unjustified as it was passed on grounds for which no show cause notice was issued. They argued that while a show cause notice dated 23.08.2024 was issued regarding the business address, and their reply led to revocation of suspension on 26.09.2024, the subsequent cancellation order dated 10.10.2024 was based on uncommunicated reasons. This constituted a colorable exercise of power and a clear violation of natural justice. Respondent's arguments: The respondent argued that a show cause notice dated 27.09.2024 was issued, and the petitioner failed to submit any explanation to it. Therefore, the respondent contended that there was no answer to the show cause notice, and the writ petition should be dismissed.