A cancellation order under the CGST Act must be a speaking order, providing reasons for the decision; failure to comply renders the order invalid.

JUDGMENT :

(MANISH CHOUDHURY, J.)

The petitioner has approached this Court by the instant writ petition, preferred under Article 226 of the Constitution of India, on the premise that its GST Registration under the Central Goods and Services Tax [CGST] Act, 2017 has been cancelled by an Order dated 18.03.2023 pursuant to issuance of a Show Cause Notice dated 14.01.2023. The assail is made inter-alia on the grounds that the manner in which the GST Registration has been cancelled is arbitrary and the impugned Order of cancellation has been passed by the Proper Officer without due application of mind.

2. It is the case of the petitioner that the petitioner is a proprietorship firm, represented by its sole proprietor, which carries on business with the trade name, M/s Enling & Co. and its principal place of business at Village – Dumba, District - Changlang, Arunachal Pradesh. The petitioner got itself registered as a proprietorship firm under the Central Goods and Services Tax [CGST] Act, 2017 [‘the CGST Act’, for short]. It is stated that when the petitioner applied for registration, the petitioner was issued Registration Certificate in Form GST REG-06 with Registration no. 12AAHPE9119RIZE w.e.f. 07.08.2017 and the Registration Certificate to that effect was issued on 28.02.2018.

3. The petitioner was issued the Show Cause Notice on 14.01.2023 by the Proper Officer asking her to show cause as to why the registration issued to it under the CGST Act should not be cancelled due to failure on her part to furnish returns for a continuous period of six months. The petitioner was thereby, asked to furnish a Reply within thirty working days from the date of service of the Show Cause Notice. The petitioner was also directed to appear before the Proper Officer at 11-00 on 11.02.2023. It was further mentioned that if the petitioner would fail to furnish a Reply within the stipulated date or to appear for personal hearing on the appointed date and time, the case would be decided ex-parte on the basis of the available records and on merits. By the Show Cause Notice, the petitioner’s Registration under the CGST Act was also suspended w.e.f. 14.01.2023.

4. Thereafter on 18.03.2023, the impugned Order came to be passed whereby the petitioner’s GST Registration has been cancelled w.e.f. 18.03.2023.

5. I have heard Mr. S.K. Agarwal, learned counsel for the petitioner and Dr. B.N. Gogoi, learned Standing Counsel, CGST for all the respondents.

6. Mr. Agarwal, learned counsel for the petitioner has submitted that in response to the Show Cause Notice, which was uploaded in the common portal, the petitioner could not submit a reply due to reasons beyond her control as it escaped her notice. No notice was served upon the petitioner manually. It is submitted that the petitioner came to learn about the Show Cause Notice when the time for filing the Reply was already over and the impugned Order dated 18.03.2023 had already been uploaded in the common portal. Though the petitioner tried to submit an application for revocation, the GST portal did not allow submission of such application as the time-limit prescribed for filing of revocation of application was already over by then. Similarly, the petitioner could not prefer an appeal due to expiry of the statutory period of limitation as well as extended period of limitation. It is submitted that the petitioner was unable to file returns for some months during Covid-19 pandemic period. Also, during the said period, the petitioner’s business suffered immensely and the business returns were nil. There was no liability of tax on account of the petitioner for the said period in respect of GST, as the petitioner’s business is very small for which the petitioner has always been furnishing nil return.

6.1. Mr. Agarwal has submitted that the impugned Order of cancellation of GST Registration is to be passed in Form GST REG-19 and the Proper Officer while cancelling a registered person’s GST Registration, has to assign reasons