M/S. Avon Udhyog, Through Partner vs. State Of Rajasthan, Through The Commissioner Of State Tax, Rgst

Held

The Court noted that the notice dated 04.02.2021, requiring a reply within 7 days, was contrary to statutory provisions, as Rule 22(2A) mandates 30 days' time for explanation. While the petitioner did not file the reply within the initial 7 days, they did file it on 20.03.2021. The Court acknowledged that Rule 22(3) clearly mandates an order to be passed within 30 days of the receipt of the reply. The Court refrained from pronouncing on the petitioner's contention that the suspension automatically stands annulled after 30 days. However, it emphasized that suspension of registration has severe consequences, bringing business to a standstill, and proceedings cannot be kept pending. The Court directed the petitioner to put forth all submissions, including the one about automatic revocation of suspension, and file a supplementary reply or written arguments. The petitioner and/or their representative were directed to appear before Respondent No. 4 on 07.07.2021, who was to provide a hearing and pass a speaking order by 14.07.2021. The petitioner's right to take further legal remedies against the order was reserved.

Facts

The petitioner, M/s. Avon Udhyog, challenged a notice-cum-order dated 04.02.2021, issued by Respondent No. 4, suspending its GST registration. A search was conducted on the petitioner's premises on 03.02.2021, leading to the notice proposing cancellation of registration. The petitioner filed a detailed reply on 20.03.2021, but no final order was passed, leaving the petitioner's right to trade in abeyance. The petitioner argued that the suspension, without an express opportunity of hearing, violated principles of natural justice and that the authorities were statutorily bound to pass a final order within 30 days of the reply, as per Rule 22(3) of the GST Rules.

Key Issues

1. Whether the suspension of a GST registration certificate, without granting an express opportunity of hearing, violates the principles of natural justice, particularly in light of Section 29 of the Rajasthan Goods and Service Tax Act, 2017, and Rules 21 and 22 framed thereunder? 2. Whether the authorities are statutorily bound to pass a final order regarding the cancellation of registration within 30 days of the petitioner's reply, as stipulated by Rule 22(3) of the GST Rules, and if not, whether the suspension automatically stands annulled or vitiated after this period? Petitioner's contentions: The petitioner argued that while suspension of registration might not explicitly require a hearing, the principles of natural justice mandate it. They further contended that Rule 22(3) of the GST Rules requires a final order within 30 days of the reply, and upon expiry of this period, the suspension should automatically cease. They relied on Article 19(1)(g) of the Constitution of India, asserting that a businessman's fundamental rights should not be kept in abeyance. Respondents' contentions: The respondents argued that the petitioner failed to file a reply within the stipulated 7 days, filing it belatedly on 20.03.2021. Therefore, the petitioner cannot raise a grievance about the protraction of proceedings.