Case Law Details
Dhruba Jyoti Saikia Vs Union of India And 3 Ors. (Gauhati High Court)
In Dhruba Jyoti Saikia vs. Union of India & Ors., the Gauhati High Court set aside an order canceling the petitioner’s GST registration, citing a lack of reasoning and due process. The petitioner, facing financial hardship, had failed to file GST returns, leading to a show cause notice on January 15, 2023, which also suspended the registration. Subsequently, on February 28, 2023, Respondent No. 4 issued an order canceling the registration but provided no detailed reasons beyond stating “Registration is cancelled.” The petitioner claimed to have filed returns later but was not granted relief administratively, prompting the writ petition.
The High Court observed that cancellation of GST registration is a quasi-judicial decision with serious civil consequences, as it directly affects a business’s ability to operate. It emphasized that any such order must be reasoned, in line with principles of natural justice. The absence of justification in the cancellation order indicated non-application of mind by the tax authorities. The court ruled that the impugned order lacked procedural fairness and set it aside, reinstating the petitioner’s registration to its status before the issuance of the show cause notice.
Judicial precedents emphasize the necessity of proper reasoning in administrative decisions affecting legal rights. The Supreme Court in Kranti Associates Pvt. Ltd. vs. Masood Ahmed Khan (2010) held that orders by authorities exercising quasi-judicial powers must be well-reasoned to ensure transparency and fairness. Similarly, the Gauhati High Court’s ruling aligns with the principle that tax authorities must provide clear justifications when canceling registrations under the GST framework.
The court permitted the petitioner to submit an additional reply to the show cause notice, highlighting the filing of returns or any other relevant grounds within ten days. The authorities were directed to consider the response and take appropriate action in accordance with the law. This case underscores the judiciary’s role in ensuring procedural compliance by tax authorities and safeguarding businesses from arbitrary administrative actions.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
1. The instant writ petition is filed challenging the order bearing ZA180223062682M dated 28.02.2023 passed by the Respondent No.4 cancelling the GST Registration of the Petitioner.
2. The facts as could be discerned from a perusal of the writ petition are that the Petitioner herein was granted a registration under the Central Goods and Services Tax Act, 2017 and was issued a certificate of 05.2018. However, as stated in the writ petition that on account of acute financial hardship, the Petitioner could not file his return. A Show Cause notice was issued on 15.01.2023 by the Respondent No.4 asking the Petitioner to Show Cause as to why his registration should not be cancelled for not filing the returns under Section 39 of the Central Goods and Services Tax Act, 2017. In the said Show Cause notice, it was also mentioned that the Registration of the Petitioner was suspended w.e.f. 15.01.2023. It is not known as to what Show Cause reply the Petitioner has filed as the said reply to the Show Cause notice is not a part of the records.
3. Be that as it may, on 02.2023, the Respondent No.4 cancelled the registration on the ground “Registration is cancelled”. It is also seen from the records that the Petitioner claims that he had filed his returns thereafter in terms with Section 39 of the CGST Act, 2017. Thereupon, the instant writ petition has been filed by the Petitioner challenging the order of cancellation dated 28.02.2023.
4. I have heard the learned counsels for the parties and also perused the materials on record.
5. A perusal of the impugned order dated 02.2023 would show that the said order is passed by a quasi judicial authority. The effect of the said order would be that in absence of a registration, the Petitioner cannot carry out his business. Therefore, the effect of the said impugned order would entail civil consequences.
6. In the backdrop of the said, if this Court peruses the order, it is shocking that the Respondent 4 had cancelled the registration by giving a reason that the “Registration is cancelled”. This clearly shows a total non-application of mind apart from the fact that the impugned order is devoid of any justifiable reasons. Accordingly, this Court therefore sets aside the said impugned order dated 28.02.2023 thereby restoring the status back to the date on which the Show Cause notice dated 15.01.2023 was issued.
7. The learned counsel for the Petitioner further submits that in the meantime, the Petitioner had already filed his This aspect of the matter can very well be taken note of by the Respondent No.4 for which liberty is given to the Petitioner to file an additional reply to the said Show Cause notice bringing to the notice of the Respondent No.4 about the filing of the returns as well as any other grounds which the Petitioner deems fit and proper. The said exercise be done within a period of 10 (ten) days from today and thereupon, the Respondent No.4 shall take due steps in accordance with law.
8. Accordingly, the instant writ petition stands disposed of in terms with the observations and directions made hereinabove.
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