M/S Bharat Pump House vs. State Of West Bengal And Ors.
Original PDF →Facts
M/s. Bharat Pump House (the appellant) filed a writ petition challenging the cancellation of its GST registration. The cancellation was based on a show-cause notice dated January 30, 2018, citing a mismatch between the address on the trade license and the partnership deed. The appellant admitted to not filing a response to the show-cause notice. The learned Single Bench, while entertaining the writ petition, did not grant an interim order, leading the appellant to file this intra-Court appeal. The High Court agreed to dispose of both the writ petition and the appeal together.
Held
The Court held that while the authority was not faulted for proceeding ex parte due to the appellant's failure to respond to the show-cause notice, it was mandatory under Rule 24(3) of the CGST Rules, 2017, to afford the appellant an opportunity of personal hearing before passing the cancellation order. The Court found that this mandate was bypassed. Consequently, the Court set aside the order of cancellation of provisional registration dated January 30, 2018, and remanded the matter back to the Commercial Tax Officer. The appellant is directed to submit its response to the show-cause notice within 15 days, after which the authority will grant a personal hearing and decide the matter on merits. The Court also directed the Deputy Commissioner of State Tax to keep in abeyance the DRC-01 notice dated March 4, 2023, until a decision is taken. The ratio is that a personal hearing must be afforded even when proceeding ex parte under Rule 24(3) of the CGST Rules, 2017.
Key Issues
1. Whether the order of cancellation of provisional registration was passed in violation of the principles of natural justice, specifically concerning the opportunity of being heard, as contemplated under Rule 24(3) of the Central Goods and Services Tax Rules, 2017? The petitioner argued that despite not filing a response to the show-cause notice, the order of cancellation was passed without affording a personal hearing, thus violating principles of natural justice. They also expressed willingness to pay taxes and file returns. The State contended that the appellant failed to respond to the show-cause notice, and therefore, the authority was justified in proceeding ex parte. The State also pointed out that multiple alternative remedies, including an appellate remedy, were available to the aggrieved dealer under the Act, which the appellant failed to avail.
Sections Cited
Rule 24(3)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.)
This intra-Court appeal by the petitioner is directed against the order dated 1st May, 2023 passed in W.P.A. 6507 of 2023. The writ petition is still pending before the learned Single Bench. However, while entertaining the writ petition and directing the affidavits to be filed, the learned Single
Bench was not inclined to grant any interim order. This is why the appellant is before this Court praying for appropriate directions/orders.
With the consent of the learned advocates on either side, the writ petition is taken up along with this appeal for being disposed of by a common order.
The challenge in the writ petition is to a cancellation of registration granted in favour of the appellant by the respondent authorities. Show-cause notice dated 30th January, 2018 was issued alongwith mismatch of address in the trade license and that of the address given in the partnership deed. It is an admitted fact that the appellant did not file its response. Consequently, the registration stood cancelled by order dated 30th January, 2018. As rightly pointed out by the learned Government Counsel, there are multiple remedies available to the aggrieved dealer to seek for revocation of the order of cancellation of registration and in case, he is unsuccessful, there is also an appellate remedy provided under the Act. The appellant did not choose to avail those remedies but had filed the writ petition.
The learned advocate appearing for the appellant submitted that in terms of Rule 24 of the Central Goods and Services Tax Rules, 2017, which deals with migration of persons registered under the existing law, under sub-Rule (3) when particulars or information specified in sub-Rule (2) have either not ben furnished or not found to be correct or complete, the appropriate officer will be entitled to take action for cancellation of the provisional registration granted under sub-Rule (1) of Rule 24. It is submitted that under sub-Rule (3) of Rule 24, prior to taking any action for cancellation, the dealer is entitled to be served with the show-cause notice and after affording the person concerned a reasonable opportunity of being heard, an order can be 2 2
passed. It is the submission of the learned advocate appearing for the appellant that in the instant case, though the appellant did not file its response to the show-cause notice, the order of cancellation of the provisional registration has been done without granting an opportunity of being heard in person. Therefore, it is submitted that the order is in violation of principles of natural justice.
Further, it is submitted by the learned advocate appearing for the appellant that the appellant is ready and willing to pay the taxes and it may be permitted to file the returns.
We have heard the learned counsel on the above submission.
As noted above, the appellant did not file its response to the show-cause notice. Therefore, the authority cannot be faulted for proceeding ex parte. Nevertheless, while doing so, the authority ought to have informed the appellant and fixed the date for personal hearing after which he could have taken action. This being a mandate under Rule 24(3) of the said Rules, the same cannot be bypassed.
Therefore, we are of the view that the matter should be relegated back to the authority namely, the Commercial Tax Officer having juri iction to enable the appellant to file its response to the allegation in the show-cause notice and the authority shall afford an opportunity of personal hearing to the authorised representative of the appellant and thereafter proceed to decide the matter on merits and in accordance with law.
Needless to state that if the appellant is able to reconcile the mismatch pointed out in the show-cause notice, if there are no other legal impediment, the order of cancellation of the provisional registration can be 3 3
set aside and the registration can be restored to enable the appellant to file its returns, pay the taxes along with other statutory dues.
In the result, the appeal and the writ petition are allowed to the extent by setting aside the order of cancellation of the provisional registration dated 30th January, 2018 and the matter stands remanded to the Commercial Tax Officer having juri iction.
The appellant is directed to submit its response/reply to the allegations in the show-cause notice within 15 days from the date of receipt of server copy of this order, after which the said authority shall afford an opportunity of personal hearing and proceed to take a decision on merits and in accordance with law. In the interregnum, since the authority has already issued a notice in DRC-01 dated 4th March, 2023, the said authority namely, Deputy Commissioner of State Tax, Srirampur Charge is directed to keep in abeyance the said notice and proceed further after a decision is taken in terms of the above directions.
No costs.
Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
(T.S. SIVAGNANAM) CHIEF JUSTICE I agree. (HIRANMAY BHATTACHARYYA, J.)
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Pallab/KS AR(Ct.) 5 5
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.