Case Law Details
Mayel Steels Pvt Ltd Vs Union of India (Bombay High Court)
In the case of Mayel Steels Pvt Ltd vs Union of India, the Bombay High Court delivered a judgment quashing the cancellation of the petitioner’s registration. The court found that the respondent had acted arbitrarily and emphasized the importance of serving proper notice to dealers.
Analysis: The court observed that the respondent, Superintendent of CGST & C EX, had acted in an arbitrary manner by issuing a show cause notice to the petitioner with a remarkably short notice period and a peculiar time for appearance. The court questioned the validity of such a notice and emphasized the principles of natural justice, stating that the petitioner should have been granted an opportunity to be heard before adverse consequences were imposed.
Furthermore, the court noted that despite the filing of the present petition, the respondent proceeded to cancel the petitioner’s registration, even including issues not mentioned in the show cause notice. This reaffirmed the court’s view that the respondent had acted arbitrarily and in breach of the principles of natural justice.
As a result, the court set aside both the show cause notice and the order cancelling the petitioner’s registration. The court also directed that if a fresh show cause notice is to be issued, the petitioner should be given an opportunity to reply in accordance with the law. Additionally, the court emphasized the need for effective communication of show cause notices, suggesting that they should be served not only through online portals but also via email and hand delivery to ensure dealers can effectively respond.
Conclusion: The judgment of the Bombay High Court in the case of Mayel Steels Pvt Ltd vs Union of India highlights the importance of adhering to principles of natural justice and avoiding arbitrary actions. The court’s decision to quash the cancellation of registration emphasizes the need for fair procedures and proper notice to be served to dealers. This judgment serves as a reminder of the significance of procedural fairness and the consequences of arbitrary administrative actions.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
We have heard learned Counsel for the parties. This is a classic case where Respondent No.2-Superintendent, Range IV, Division II, CGST & C EX, has acted in an arbitrary manner in cancelling the CGST registration of the Petitioner. A show cause notice was issued to the Petitioner on 1st August 2022 peculiarly calling upon the Petitioner to remain present on 2nd August 2022 at 2.01 p.m. Such show cause notice was merely uploaded on the WebPortal. We fail to understand as to how such short notice could be issued to the Petitioner, calling upon the Petitioner to remain present on the next date and, that too, at a very peculiar time at about 2.01 p.m. Be that as it may, in circumstances things stood, after the Petitioner became aware of the show cause notice, the Petitioner submitted a reply to the show cause notice dated 8th August 2022, which was received by the said authority on 9th August 2022. In the meantime, it appears that the Joint Commissioner of State Tax (GST) issued orders under FORM GST DRC-22 for Provisional Attachment of Bank Account/Property under Section 83 of the CGST/SGST Act, 2017.
2. On the above backdrop, on 24th November 2022, the Petitioner approached this Court by filing the present petition, making a grievance that such action being resorted by Respondent No.2 was patently arbitrary. The Petitioner has contended that the adjudication of the show cause notice overlooks the basic principles of natural justice as is passing an order adverse to the Petitioner inflicting the Petitioner with civil consequences the Petitioner was never granted an opportunity of being heard.
3. It appears that despite Respondent No.2 being put to notice of the filing of this petition, which was served on 2nd December 2022, Respondent No.2 proceeded to pass an order dated 2nd January 2023, cancelling the Petitioner’s registration. It also appears that the impugned order takes within its ambit some issues, which are not part of the show cause notice.
4. In the above circumstances, there is no reason to not accept the Petitioner’s case that Respondent No.2 acted in an arbitrary manner in exercising powers vested in him when he passed the impugned order in breach of the principles of natural justice. In these circumstances, there can be no alternative but to set aside not only the show cause notice but the impugned order dated 2nd January 2023 cancelling the Petitioner’s registration. Ordered accordingly.
5. We may also clarify that Respondent No.2 is free to issue fresh show cause notice. If that be so, an opportunity be given to the Petitioner to reply to the fresh show cause notice in accordance with law.
6. We may also observe that whenever an action is intended to be taken by the Respondent in respect of registration of the dealers, it is expected that the show cause notice in that regard is not merely uploaded on the Web-portal but also a copy of the same be forwarded to the dealers by e-mail and/or by hand delivery, so that the same are effectively replied.
7. Disposed of in the above terms. No costs.
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