Busy Mechanics Private Limited vs. The State Of Bihar

Facts

The petitioner, Busy Mechanics Private Limited, is challenging an order dated July 28, 2021, which cancelled its GST registration. The petitioner contends that the order is non-speaking and lacks reasons. The State submitted that the Assessing Officer adopted Form GST REG-19. The Court observed that Form GST REG-19 has a specific column for assigning reasons, which was not utilized. The order provided no explanation for the cancellation, nor did it refer to the subject of the notice. The Court noted that the Assessing Officer appeared to believe that no reasons were required if the assessee did not appear or file an objection.

Held

The Court held that the order cancelling the petitioner's GST registration (Annexure-2) is illegal and unsustainable. It is a non-speaking order, failing to provide any reasons for the cancellation, which violates the principles of natural justice. The Court referred to a previous judgment of a Division Bench in Manoj Kumar Sah vs. The State of Bihar and Anr., which held that a non-speaking and cryptic order, where the reason for cancellation is not decipherable, violates natural justice and warrants quashing due to penal and pecuniary consequences. The Court found the impugned order suffered from the same illegality. Consequently, the Court set aside the order and directed reconsideration of the issue. The Court also noted Notification No. 3 of 2023, which allows a further period for registered persons to apply for revocation of cancellation if it was for failure to file returns under Section 29(2)(b) or (c), subject to conditions.

Key Issues

1. Whether the order cancelling the petitioner's GST registration, which fails to provide any reasons, violates the principles of natural justice and is therefore illegal, as per Section 29 of the CGST Act/Bihar GST Act and Rule 21 of the CGST/Bihar GST Rules? Petitioner's arguments: The order of cancellation is a non-speaking order, lacking any reasons for the decision. This violates the principles of natural justice, rendering the order illegal. The Assessing Officer failed to assign reasons in the prescribed format (GST REG-19), indicating a procedural illegality. Revenue's arguments: The State submitted that Form GST REG-19 was adopted by the Assessing Officer. The judgment does not record any further arguments from the revenue.