Case Law Details
SAT Industries Limited Vs Union of India (Bombay High Court)
Suspension of GST registration without opportunity of being heard- HC issues notice to Centre/State Govts
Petitioner submitted that the original Sub-Rule (2) of Rule 21A of the Central Goods and Service Tax Rules, 2017 provided that a party shall be given a reasonable opportunity of being heard before passing of a suspension order, which portion has been deleted by a Notification dated 22nd December, 2020. Mr. Kothari submitted that this goes against the principle of natural justice because implication of such a suspension is drastic. A registered person whose registration has been suspended cannot make any taxable supply during the period of suspension and shall not be granted any refund during the period of suspension. Therefore, Petitioner is challenging the omission of the words “after affording the said person a reasonable opportunity of being heard” in Sub-Rule (2) of Rule 21A of the CGST Rules, 2017.
Petitioner is challenging both CGST as well as MGST Rules in this regard. Therefore, notice has to be issued to the learned Attorney General of India as well as the Advocate General.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Petitioner has been issued a show cause notice for cancellation of Registration dated 8th August, 2022 and in show cause notice itself it is provided that “Please note that your registration stands suspended with effect from 08/08/2022”.
2. It is Petitioner’s case that this order has been issued in the show cause notice itself without affording any opportunity to Petitioner of being heard.
3. Mr. Kothari appearing for Petitioner submitted that the original Sub-Rule (2) of Rule 21A of the Central Goods and Service Tax Rules, 2017 (“CGST Rules”) provided that a party shall be given a reasonable opportunity of being heard before passing of a suspension order, which portion has been deleted by a Notification dated 22nd December, 2020. Mr. Kothari submitted that this goes against the principle of natural justice because implication of such a suspension is drastic. A registered person whose registration has been suspended cannot make any taxable supply during the period of suspension and shall not be granted any refund during the period of suspension. Therefore, Petitioner is challenging the omission of the words “after affording the said person a reasonable opportunity of being heard” in Sub-Rule (2) of Rule 21A of the CGST Rules, 2017.
4. Petitioner is challenging both CGST as well as MGST Rules in this regard. Therefore, notice has to be issued to the learned Attorney General of India as well as the Advocate General.
5. Registry to issue notice.
6. As regards the Advocate General, Ms. Chavan states that she will accept the notice and no formal notice is required to be given.
7. Affidavit-in-Reply to be filed within three weeks from receiving of notice. Rejoinder, if any, to be filed within two weeks thereafter.
8. Petition to be listed on 10/10/2022.
9. In the meanwhile, there shall be ad-interim stay in terms of prayer clause (c), which reads as under :-
“(c) that pending the hearing and final disposal of the petition, this Hon’ble Court may be pleased to :-
(i) this Hon’ble Court may be pleased to stay the effect and operation of the impugned show cause notice dated 08.08.2022 (Annexure-1) vide which, the registration certificate of the petitioner under the GST Act has been suspended;
(ii) direct the Respondents to revoke the suspension of the Petitioner’s GST registration immediately and restore the same.”
