JD Enterprises Vs State of Bihar (Patna High Court)
Conclusion: Where inspection reports and material evidence establish non-functional business activity and assessee failed to avail opportunities for hearing, cancellation of registration under Rule 21 of the BGST Rules could not be faulted. Writ jurisdiction could not be invoked to bypass the statutory remedy of an appeal.
Held: Assessee was a registered dealer under the Bihar GST Act engaged in coal trading, was granted registration effective from 15.11.2019 with principal and additional places of business in Aurangabad, Rohtas, and Vaishali. Multiple inspections were conducted — first on 03.08.2021 and 23.11.2021, which did not report non-existence; however, subsequent inspections on 02.05.2024 alleged that the business was non-functional and only engaged in bill trading without actual movement of goods. A Show Cause Notice (SCN) was issued under Rule 21, citing violations. Assessee filed a written response, but the Joint Commissioner, finding the explanation unsatisfactory, cancelled the registration with a reasoned order. Instead of filing a statutory appeal under Section 107, assessee directly filed a writ petition in the High Court. It was held that the principles of natural justice were duly followed: a detailed SCN was served, an opportunity to reply was given, and the final cancellation order was well-reasoned. The court noted that the factual findings from the inspection—that the business premises were a sham and used for bill trading—remained unassailed and undisputed by assessee. Since a proper procedure was followed and the order was based on solid facts, the court held that the writ jurisdiction could not be invoked to bypass the statutory remedy of an appeal.
