Islam And Brother Through Shri Shoaib Ahamad vs. The State Of Madhya Pradesh

Held

The Court held that while a show cause notice was issued on May 13, 2024, and an order of cancellation was passed on July 25, 2024, indicating that an opportunity of hearing was indeed provided, the petitioner's desire to re-enter the tax regime and the potential benefit to the revenue from his participation in the formal economy warranted a different approach. The Court observed that the petitioner's submission of 'Nil liability' returns when asked to submit returns suggested a potential mischief. Nevertheless, considering the petitioner's adversity and desire to resume business, the Court set aside the impugned orders dated September 4, 2025, July 25, 2024, and January 15, 2025. The petitioner was directed to submit all pending GST returns, particularly for the period of cancellation. Upon submission of these returns, the Authority was to consider revocation of registration if permissible by law. The petitioner was also directed to pay a cost of Rs. 75,000/- to the department along with the pending returns, acknowledging his default.

Facts

The petitioner, proprietor of "Islam and Brothers", sought to quash three orders and restore his GST registration. The petitioner's GST registration was cancelled on July 25, 2024, due to non-submission of GST returns. The petitioner claimed he could not pay attention to submissions due to health issues and that he was not given sufficient opportunity of hearing. The respondents argued that a show cause notice was issued on May 13, 2024, and sufficient opportunity was provided before cancellation. The petitioner, however, conceded that if given a chance to revoke registration and resume business, he would not be prejudiced. The Court noted that the petitioner had submitted 'Nil liability' returns when asked, suggesting potential mischief.

Key Issues

1. Whether the petitioner was afforded sufficient opportunity of hearing before the cancellation of his GST registration, as required under the Central Goods and Services Tax Act, 2017 and Rules, specifically concerning Section 29 and Rule 21(a) and (h)? Petitioner's contention: The petitioner argued that sufficient opportunity of hearing was not provided, and if it had been, he could have explained his reasons for non-furnishing returns. Revenue's contention: The respondents contended that the petitioner was given sufficient opportunity of hearing, referencing Section 25, 29, and 30 of the CGST Act and Rules 21(a) and (h), 22, and 23 of the CGST Rules, 2017. They suggested the petitioner could apply for fresh registration. 2. Whether the cancellation of GST registration and subsequent orders were justified in light of the petitioner's circumstances and conduct?