Non-Speaking GST Cancellation Order Quashed for Violation of Natural Justice: HC

The decision has been in favour of the petitioner, as the order of GST registration cancellation was passed without any proper reason. The court held that such an order was against the principles of natural justice; hence, it was quashed, and the petitioner was given another opportunity.

Rakhe Achi filed an appeal in the Gauhati High Court against the Union of India and the CGST authorities under Article 226 of the Constitution of India. The case relates to Section 29(2)(c) of the CGST Act, 2017, along with Rule 22 of the CGST Rules, 2017. It challenges the order dated May 27, 2023, issued by the Proper Officer of the CGST Department, by which the petitioner’s GST registration was cancelled.

The petitioner is a small businessman dealing in stationery and government supplies under the name “M/s AA Enterprise”. He said that he could not file his GST returns for some time because he was unwell and his business was also incurring losses. For this reason, he could not file returns for six consecutive months, due to which the department sent him a notice. Although the department had uploaded the notice on the online portal, the petitioner said that he could not get the information on time. He could neither respond on time nor attend the hearing. By the time he came to know later, his registration had been cancelled, and the deadline for appeal or revocation had also passed.

The court looked into the entire matter and found that in the final order (May 25th, 2022) that was passed, no clear reason was given for the cancellation of registration, and it was a “non-speaking order”, in which the reason behind the decision was not given. As per law, such an order is required to give reasons, especially when it has a negative impact on a person.

The court said that the mere fact that the petitioner did not respond to the notice does not give the officer liberty to pass the order without assigning any reason. It is important to give proper reasons for every decision so that it can be proved that the officer has thought properly. On this basis, the court quashed the order dated May 27, 2023 and sent the case back to the same position from where the notice was issued. Also, the petitioner has been given a time of one month in which he can either respond to the notice or file all his pending returns and deposit the tax, interest and penalty. Finally, the court partially accepted the petition and directed that the further process be completed in accordance with the law and in the right manner.