M/S Gaurav Traders vs. The State Of Bihar

Facts

The petitioner, M/s Gaurav Traders, through its proprietor Harinarayan Sah, is challenging the order dated July 15, 2021, which cancelled its GST registration. The petitioner contends that the order is non-speaking and lacks any reasons for the cancellation. 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 reasons, which was not utilized. 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. The impugned order was found to suffer from the same illegality as identified in a previous judgment by another Division Bench of the same Court.

Held

The Court held that the order cancelling the petitioner's GST registration (Annexure-P/1) is a non-speaking order and suffers from illegality. The Court reasoned that Form GST REG-19, as per the Bihar Goods and Services Taxes Rules, 2017, specifically requires the assignment of reasons for cancellation. The Assessing Officer's apparent belief that reasons are not necessary when an assessee fails to appear or file an objection was found to be incorrect. The Court referred to a previous judgment in Manoj Kumar Sah versus The State of Bihar and Anr. (C.W.J.C. No. 18307 of 2022), which held that a non-speaking and cryptic order, where the reason for cancellation is not decipherable, violates the principles of natural justice and warrants quashing due to potential civil and penal consequences. Consequently, the Court set aside the impugned order and directed reconsideration of the issue. Additionally, the Court noted Notification No. 3 of 2023, which allows a period up to June 30, 2023, for revocation of cancellation if it was for failure to file returns under Section 29(2)(b) or (c), subject to filing returns and making payments.

Key Issues

1. Whether the order cancelling the petitioner's GST registration, which fails to provide any reasons, is a non-speaking order and violates principles of natural justice, particularly in light of the requirements of Form GST REG-19 under the Bihar Goods and Services Taxes Rules, 2017? Petitioner's Argument: The petitioner argued that the order of cancellation is non-speaking, meaning it does not provide any justification or reasoning for the action taken. This lack of reasoning violates the fundamental principles of natural justice, rendering the order illegal. They relied on the structure of Form GST REG-19, which mandates the assignment of reasons. Respondent's Argument: The State submitted that the Assessing Officer had adopted Form GST REG-19. The judgment does not record any further specific arguments from the State regarding the validity of the non-speaking order.