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Grants Relief to Super Enterprises Over GST Cancellation Citing ''
, in a significant ruling, has set aside the GST registration cancellation of , observing that a permanent cancellation could result in the "" of a business. The division bench directed tax authorities to consider the firm's revocation application on its merits within two months.
The order, delivered on by Justices Rajeev Ranjan Prasad and Ramesh Chand Malviya, provides a lifeline to the Muzaffarpur-based firm whose registration was cancelled for failing to file returns for six months after . The court found that the tax department's procedure violated the under .
Why the Hearing Was an ''
The case turned on a critical procedural flaw. The issued on , allowed the petitioner 30 days to file a reply but simultaneously fixed the for —well before the reply deadline.
"The date of
was required to be fixed only after the authorities would not have been convinced with the show cause and an adverse order was contemplated,"
the bench noted. Since no reply had been filed within the stipulated period, the hearing date was premature and amounted to what the court termed an "
."
Section 75(4) of the BGST Act states that an opportunity of hearing shall be granted where a request is received in writing or where any is contemplated. The court clarified that fixing a hearing before the reply period expires defeats the purpose of the provision.
Background: Illness, Consultant Failure, and Tax Dues
Super Enterprises, through its sole proprietor Sanat Kumar, admitted that due to unavoidable circumstances including illness, it could not file returns for six months after . The firm's consultant also failed to inform it about the uploaded on the GST portal.
After the registration was cancelled on , the firm filed its GSTR-3B and GSTR-1 returns on , and cleared all pending taxes along with late fees and penalty. However, its appeal against cancellation was dismissed on , solely on the ground of —a decision the high court found too harsh.
Precedent: '' Principle from
Relying on its earlier decision in , the court reiterated that permanent cancellation of GST registration could effectively shut down a business forever.
"A permanent cancellation of registration is likely to inflict
to the livelihood of the petitioner,"
the judgment observed. This principle guided the court to intervene even though the petitioner had defaulted on returns.
"The petitioner cannot be allowed to take a plea that because of
on the part of his consultant, the return could not be filed,"
the respondents argued. But the court weighed this against the disproportionate impact of permanent cancellation.
Key Observations from the Judgment
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"An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any is contemplated against such person."
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"When no show cause was filed within the given period of 30 days, thereafter, a date of hearing was required to be fixed."
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"Fixing a date for hearing in the was an ."
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"Permanent cancellation of registration is likely to inflict to the livelihood of the petitioner."
Final Decision: A Window for Revocation
The high court set aside the appellate order and granted the petitioner three weeks to file an application for revocation of the cancellation order before the competent authority. The court directed that this application must be considered on its own merits and not rejected on the ground of alone. The authority must pass an appropriate order within two months of filing.
The writ petition was allowed to the extent indicated, providing a clear path for Super Enterprises to resume its business operations if the revocation is granted.
This ruling serves as a reminder for tax authorities to adhere to procedural fairness and for taxpayers to remain vigilant about compliance and communication with their consultants.
