Mohd. Shahzar vs. The State Of Madhya Pradesh

Held

The Court held that while the petitioner was provided with opportunities of hearing, as evidenced by the issuance of show cause notices and the filing of a reply, the circumstances warranted a different approach. The Court noted the petitioner's adversity and his desire to rejoin the tax regime. It was deemed to be in the interest of the department/revenue to bring the petitioner back into the formal economy to ensure regular tax compliance. Consequently, the impugned orders dated 29.02.2024 and 22.08.2023 were set aside. The petitioner was directed to submit all pending GST returns, particularly for the period when his registration was cancelled. Upon submission of these returns, the authority was to consider the case for revocation of registration. As a consequence of his default, the petitioner was liable to pay a cost of Rs. 50,000/- to the department along with the pending returns. The Court explicitly stated that this order was passed in the peculiar facts and circumstances of the case.

Facts

The petitioner, Mohd. Shahzar, owner of National Electric Electronics Telecom Contractor, failed to submit GST returns for the year 2022-23 due to adverse family circumstances, leading to the cancellation of his GST registration. He filed an application for revocation of cancellation, which was rejected by an order dated 22.08.2023. Subsequently, his appeal against this rejection was dismissed by the Joint Commissioner (Appeal) via an order dated 29.02.2024. The petitioner approached the High Court under Article 226 of the Constitution of India, alleging insufficient opportunity of hearing. He submitted that he would not be prejudiced if given a chance to revoke his registration and restart his business, even with a cost imposed.

Key Issues

1. Whether the petitioner was provided with sufficient opportunity of hearing before the cancellation of his GST registration and rejection of his revocation application, as per Section 29 and Section 30 of the Central Goods and Services Tax Act, 2017, and Rule 21(a) and (h), Rule 22 and Rule 23 of the Central Goods and Services Tax Rules, 2017? 2. Whether the impugned orders warrant setting aside in light of the petitioner's submission that he would not be prejudiced if granted a chance to regularize his compliance and restart his business, even with a cost? The petitioner argued that he was not given sufficient opportunity of hearing and would be willing to pay a cost if allowed to revoke his registration and resume business. The respondents, referring to Sections 25, 29, and 30 of the CGST Act and Rules 21(a), 21(h), 22, and 23 of the CGST Rules, contended that the petitioner was indeed given sufficient opportunity of hearing and could apply for fresh registration.