Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Guj) 1054

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, D.N. RAY, JJ.
M/s Bhagwati Construction - Petitioner
Versus
The State of Gujarat & Ors. - Respondents
R/Special Civil Application No. 766 of 2025
Decided On : 03-04-2025

Advocates Appeared:
For the Petitioner: Mr. Chetan K. Pandya.
For the Respondent: Ms. Shrunjal Shah, AGP.

The court emphasized the necessity of providing an opportunity to be heard before canceling GST registration, especially when the proprietor has died and the legal heir is unaware of compliance requirements.

Headnote:
(A) Constitution of India - Article 227 - Goods and Services Tax Act, 2017 - Sections 107 and 107(4) - Challenge to cancellation of GST registration - Petitioner contended that cancellation was based on non-receipt of notices and lack of knowledge post the proprietor's death - Court permitted filing of application for revocation of cancellation, directing timely consideration by the authorities. (Paras 3, 17, 27)

(B) Administrative Law - Principles of natural justice - The court emphasized the necessity of providing an opportunity to be heard before passing ex-parte orders, especially in cases involving the death of a proprietor and the unawareness of legal heirs regarding compliance. (Paras 10, 14, 25)

Facts of the case:
The petitioner, a legal heir of a deceased proprietor, challenged the cancellation of GST registration due to alleged non-compliance and lack of notice, asserting ignorance of the proceedings following the proprietor's death. The registration was cancelled without a hearing.

Findings of Court:
The court allowed the petitioner to file for revocation of the cancellation, emphasizing the need for the authorities to consider the application fairly and provide a hearing.

Issues: The main issues included whether the petitioner received proper notice regarding the cancellation and the implications of the proprietor's death on compliance with GST regulations.

Ratio Decidendi: The court ruled that the legal heir must be given an opportunity to respond to notices and that the cancellation of registration without a hearing was improper, highlighting the importance of natural justice.

Result: Petition disposed of with directions for revocation application to be considered.

ORDER :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Chetan K.Pandya for the petitioner and learned Assistant Government Pleader Ms. Shrunjal Shah for the respondents.

2. Issue notice forthwith. Learned Assistant Government Pleader Ms. Shrunjal Shah waives service of notice on behalf of the respondents.

3. By this petition under Article 227 of the Constitution of India, the petitioner has challenged the show cause notice dated 2.11.2022 for cancellation of registration as well as the order of cancellation of registration dated 21.11.2022 and order dated 30.11.2023 passed by the Deputy Commissioner of State Tax, Appeals rejecting the appeal of the petitioner on the ground of limitation.

4. Brief facts of the case are that the petitioner is engaged in the supply of scaffolding and dismantling services and all other ancillary services and the petitioner was also registered with the GST Department.

5. Assistant Commissioner, Ghatak-100, Jamnagar had issued a show cause notice in Form GST REG-17 dated 14.05.2018 for cancellation of registration on the ground that “Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of 6 months.”

6. It is the case of the petitioner that thereafter vague and non speaking order of cancellation of Registration dated 14.08.2018 was passed without hearing the petitioner.

7. After coming to know about order of cancellation of Registration dated 14.08.2018, the petitioner had preferred an application dated 12.06.2019 for revocation of order of cancellation of registration.

8. The Commercial Tax Officer, Ghatak-100, Jamnagar had issued a show cause notice in Form GST REG-23 dated 25.06.2019 for rejection of application for revocation of cancellation of registration.

9. Thereafter Commercial Tax Officer, Ghatak-100 passed an order for revocation of cancellation of registration in Form GST REG-22 whereby the GST registration of the petitioner was restored.

10. It is the case of the petitioner that on 05.12.2019, proprietor of the petitioner had passed away and legal heir of the deceased proprietor is not an educated person and was unaware of the norms of business conducted by deceased husband/proprietor of M/s. Bhagwati Construction and necessary compliances related to GST were done by the deceased proprietor with the help of tax practitioner and thus legal heir of deceased Subi Devi had no knowledge related to the compliances done under GST.

11. Respondents thereafter issued notices and orders in Forms ASMT 10, GST DRC 01A, GST DRC 01 and GST DRC 07. It is the case of the petitioner that legal heir of deceased proprietor Subi Devi being an uneducated house-wife residing in Bihar was not aware about any of the notices and therefore, orders were passed ex-parte after the said demise of the proprietor of M/s. Bhagwati Construction.

12. The State Tax Officer thereafter had made a spot visit on 01.10.2022 at the registered business premises of M/s. Bhagwati Construction at Vinayak City, Plot No.34/4, Naghedi, Jamnagar where the department found the owner of the premises who had rented the place to the petitioner’s deceased husband for business purpose who informed the department about the death of proprietor of M/s. Bhagwati Construction.

13. Respondent no.3 State Tax Officer thereafter issued the impugned notice in Form GST REG-17/31 dated 02.11.2022 for cancellation of registration on the ground that “In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts”.

14. It is the case of the petitioner that the petitioner did not receive the show cause notice in Form GST REG-17/31 dated 2.11.2022 and she could not access the GST portal as she was unaware about anything related to GST and show cause notice dated 2.11.2022 was not brought to the attention of the petitioner. The petitioner therefore, could not reply to the show cause notice dated 2.11.2022 and the department without hearing the petitioner passed the order dated 21.11.2022 cancell

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