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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
MANISH CHOUDHURY, J.
Juri Bhuyan, Represented By Its Proprietor Smti Juri Bhuyan – Petitioner
Versus
Union Of India, Represented By The Secretary To The Government Of India, Department Of Finance And Ors. – Respondents
WP(C) No.1701 Of 2025
Decided On : 01-05-2025
(A) Central Goods and Services Tax Act, 2017 - Sections 29(2)(c) and 39(1) - Cancellation of GST Registration - The petitioner challenged the cancellation of her GST registration on grounds of arbitrary action and lack of reasoning in the order. The court found the cancellation order to be a non-speaking one, lacking the necessary reasons for its decision, thus violating principles of natural justice. (Paras 20, 21, 24)
(B) Natural Justice - The obligation to record reasons for administrative decisions is essential to ensure fair play and prevent arbitrary actions. The absence of reasons in the cancellation order was deemed illegal. (Paras 22, 23)
Facts of the case:
The petitioner, a works contractor, had her GST registration cancelled due to non-filing of returns for six months, which she attributed to circumstances beyond her control, including the Covid-19 pandemic. The cancellation order was issued without a proper hearing or adequate reasoning.
Findings of Court:
The court held that the cancellation order was not in compliance with statutory requirements and lacked a speaking order, thus quashing the order and allowing the petitioner to respond to the show cause notice.
Issues: The main issues included whether the cancellation order was arbitrary and whether the proper officer had followed due process in cancelling the registration.
Ratio Decidendi: The court emphasized that an adjudicating authority must provide reasons for its decisions, especially when such decisions adversely affect individuals, and failure to do so renders the order illegal.
Result: The impugned Order dated 09.09.2020 is set aside and quashed.
The legal document emphasizes the importance of adhering to procedural fairness and principles of natural justice in administrative decisions, particularly in cases involving cancellation of GST registration. The key points are as follows:
Requirement to Record Reasons: An authority exercising powers such as cancellation of GST registration must provide clear and specific reasons for its decision. The absence of reasons renders the order non-speaking and illegal, as it violates the statutory obligation and principles of natural justice (!) (!) (!) .
Procedural Compliance: The order must be in the prescribed form (FORM GST REG-19) and must explicitly state the reasons for cancellation, including the basis of the reply received and the considerations taken into account. Orders that do not specify reasons are deemed to be passed without proper application of mind and are thus invalid (!) (!) .
Right to Fair Hearing: Even if a registered person does not submit a reply or attend a hearing, the proper officer is still obligated to issue a reasoned, speaking order. The failure to do so constitutes a violation of procedural fairness and natural justice (!) (!) .
Options for the Registered Person: The affected individual has two primary options upon receipt of a show cause notice: (a) to furnish all pending returns and pay the dues, interest, and penalties, which can lead to the proceedings being dropped; or (b) to respond to the show cause notice with reasons why the registration should not be canceled. The authority is required to act expeditiously based on the chosen course (!) (!) .
Timelines and Fair Process: The authority must adhere to statutory timelines, such as issuing a show cause notice, providing an opportunity to respond, and passing a final order within a specified period, ensuring that the process is fair and transparent (!) (!) .
Impact of Cancellation: Cancellation of GST registration has significant civil consequences, affecting the ability to conduct business and carry out statutory obligations. Orders canceling registration must therefore be issued with proper reasoning to ensure they are lawful and just (!) (!) .
Legal Recourse: If the order is non-speaking or otherwise procedurally flawed, the affected party is entitled to challenge it in court, and the order can be set aside and remanded for proper consideration, as demonstrated in the case where the order was quashed due to lack of reasons (!) .
In summary, the document underscores that administrative decisions, especially those adversely affecting individuals, must be supported by clear, reasoned orders in compliance with statutory procedures, ensuring fairness and preventing arbitrary actions.
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 her GST Registration under the Central Goods and Services Tax [CGST] Act, 2017 has been cancelled by an Order dated 09.09.2020 pursuant to issuance of a Show Cause Notice dated 27.08.2020. 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 she is a Works Contractor and carries on her business from Duliajan, District – Dibrugarh, Assam. The petitioner got herself registered as a proprietorship firm under the Central Goods and Services Tax [CGST] Act, 2017 [‘the CGST Act’, for short]/State Goods and Services Tax [SGST] Act, 2017 [‘the SGST Act’, for short]. It is stated that when the petitioner applied for registration, the petitioner was issued a Registration Certificate in Form GST REG-06 with Registration no. 18BOXPB4909M1Z9 w.e.f. 01.07.2017 and the Registration Certificate was issued on 07.12.2017.
3. The petitioner was issued the Show Cause Notice on 27.08.2020 by the Proper Officer asking her to show cause as to why the Registration issued to her 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 seven days from the date of service of the Show Cause Notice. It was further mentioned that if the petitioner would fail wither 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.
4. Thereafter on 27.08.2020, the impugned Order came to be passed whereby the petitioner’s GST Registration has been cancelled w.e.f. 09.09.2020.
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 fairly submitted that in response to the Show Cause Notice, which was uploaded in the common portal, the petitioner could not submit her Reply due to reasons beyond her control as it escaped her notice. It is submitted that due to advent of Covid-19 and its continuance, the petitioner’s business suffered hugely. 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 09.09.2020 had already been uploaded in the common portal. After improvement of the Covid-19 situation, the petitioner made efforts to revive the business gradually. The petitioner had submitted returns only upto September, 2020, as allowed by the GST Portal and is ready and willing to submit all the pending returns, if allowed by the authority. 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.
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 an assessee’s GST Registration, has to assign reasons for cancellation of registration. But, the impugned Order dated 27.08.2020 is a non-speaking one. He has further submitted that the case of the present petitioner is substantially similar to the case of the petitioner in the writ petition, W.P.[C] no. 1771/2025, which was disposed of by an Order dated 05.04.2025.
7. Dr. Gogoi, learned Standing Counsel, CGST for the all respondents has submitted that
An administrative authority must provide reasons for its decisions, especially when such decisions adversely affect individuals, to ensure compliance with principles of natural justice.
A cancellation order under the CGST Act must be a speaking order, providing reasons for the decision; failure to comply renders the order invalid.
A cancellation order under the CGST Act must be a speaking order, providing reasons for the decision to ensure compliance with principles of natural justice.
The cancellation of GST registration must be supported by a reasoned order; failure to provide reasons renders the order illegal and violates principles of natural justice.
The cancellation of GST Registration without providing reasons violates principles of natural justice and statutory requirements, rendering the order illegal.
An order cancelling a registration under statutory provisions must be a speaking order, assigning specific reasons for the decision. The failure of an assessee to respond to a show cause notice does ....
A cancellation of GST registration must be a speaking order, providing clear reasons for its decision, especially when it entails adverse civil consequences.
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