HC restores GST Registration as response to SCN not considered

Kala Coke and Chemicals Pvt. Ltd. Vs State of Bihar through the Commissioner (Patna High Court)

It cannot be disputed that with the passing of the said order, petitioner is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non­speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences.

Record, as made available, reveals that the petitioner had applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the petitioner. After Covid-19 Pandemic, petitioner’s firm started work. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the petitioner having made a fervent request for condonation of delay in accepting the return, preventing cancellation of registration.

Hence, for all the aforesaid reasons, the order dated 27.07.2021 passed by the respondent no.3, namely the Joint Commissioner of State Tax, Shahabad Circle, Bhojpur is quashed with the petitioner’s registration restored, with a further direction to the respondent no. 1, namely The Commissioner, Department of State Taxes, Government of Bihar, Patna to finalize the petitioner’s assessment and/or pass appropriate orders, in accordance with law.

FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT

Petitioner has prayed for the following relief(s):-

“(i) For the issuance of consequential writ order for quashing of the order dated 09.11.2022 issued vide Memo No. 1972 dated 09.11.2022 passed by the Additional Commissioner, State Tax (Appeals) Patna West Division, Patna wherein the Additional Commissioner, State Tax (Appeals), Patna West Division, Patna dismissed the Appeal filed for revocation of cancellation of Registration bearing Appeal Case No. GST/SH-37/2022-23;

(ii) For the issuance of writ/order for quashing of the ex-parte order dated 27 07 2021 passed by the Joint Commissioner of State Tax, Shahabad Circle, District Bhojpur, wherein the Registration of the petitioner under the GST Act, 2017 has been cancelled without giving due concern to the petitioner’s contentions;

(iii) For the issuance of a direction to the Respondent No. 3 to restore the registration granted under GST Act, 2017 of the petitioner Company as it was cancelled by an ex-parte order;

(iv) For the issuance of a direction to the Respondents for de-freezing/de-attaching of the Bank Account of the petitioner Company;

(v) For the further issuance of a direction restraining the Respondent No. 3 from taking any coercive action for recovery of the amount in demand during the pendency of the instant writ petition;

(vi) For the grant of any relief(s) to which the petitioner is entitled in the facts and circumstances of this case.”

Vide order dated 27.07.2021 (Page 12 to the brief), the Joint Commissioner of State Taxes, Shahabad Circle, Bhojpur has cancelled the petitioner’s registration under the provision of Section 29 of the Bihar Goods and Services Tax Act, 2017. Prior thereto, no notice to show cause was issued to which the petitioner could respond. The order is extracted in toto as under:-

“Reference Number: ZA100721398312U

Date: 27/07/2021

To
KALA COKE & CHEMICALS PVT. LTD.
GIDHA INDUSTRIAL AREA, KOILWAR, ARA, Bhojpur, Bihar-
802130
GSTIN/UIN: 10AAEFK4519L2ZH
Application Reference No. (ARN): AA100221018052E

Date: 11/02/2021

Order for Cancellation of Registration

This has reference to your reply dated 24/03/2021 in response to the notice to show cause dated 11/02/2021

Whereas no reply to notice to show cause has been submitted;

Whereas on the day fixed for hearing you did not appear;

The effective date of cancellation of your registration is 27/07/2021 Determination of amount payable pursuant to cancellation:  Accordingly, the amount payable by you and the computation and basis thereof is as follows:

The amounts determined as being payable above are without prejudice to any amount that may be found to be payable you on submission of final return furnished by you.

You are required to pay the following amounts on or before 06/08/2021 failing which the amount will be recovered in accordance with the provisions of the Act and rules made thereunder.

Place: Bihar
Date: 27/07/2021

Sudhir Kumar Purvey
Joint Commissioner of State Tax
Shahabad”

It cannot be disputed that with the passing of the said order, petitioner is liable to both civil and penal consequences. To say the least, the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is non­speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences.

Record, as made available, reveals that the petitioner had applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the petitioner. After Covid-19 Pandemic, petitioner’s firm started work. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the petitioner having made a fervent request for condonation of delay in accepting the return, preventing cancellation of registration.

Hence, for all the aforesaid reasons, the order dated 27.07.2021 passed by the respondent no.3, namely the Joint Commissioner of State Tax, Shahabad Circle, Bhojpur is quashed with the petitioner’s registration restored, with a further direction to the respondent no. 1, namely The Commissioner, Department of State Taxes, Government of Bihar, Patna to finalize the petitioner’s assessment and/or pass appropriate orders, in accordance with law.

We reiterate that issue of delay in filing the returns shall remain closed and not raised again as is stated by Sri Vikash Kumar, learned Standing Counsel-11 appearing for the respondents.

The writ petition stands allowed in the above terms. Interlocutory Application, if any, shall stand disposed of.