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August 10, 2022

Rejection of GST registration by cryptic and non-speaking order not allowed

by CA Shivam Jaiswal in GST, Legal Court Judgement

Rejection of GST registration by cryptic and non-speaking order not allowed

Facts and Issues of the case

The petitioner had made an application seeking registration in accordance with Section 22 r/w Section 25 of the CGST Act and Rule 8 of the CGST Rules. The registration sought was in respect of a rice mandi, the receipt of the application is duly acknowledged and physical verification was also duly undertaken. Thereafter, a notice come to be issued by the respondent officer seeking a clarification with respect to the application for registration. The clarification sought was that the application did not enclose the details of principal place of business of the petitioner.  The petitioner duly responded uploading a copy of the rental / lease deed duly registered in the office of the Sub-Registrar, Krishnagiri as proof of principal place of business. The main ground upon which the order is assailed is that it is cryptic and entirely non-speaking.

Observations by the court

In my considered view, an order of this nature is in defensive insofar as it is non-speaking, arbitrary and evidently has not taken into account the explanation furnished by the petitioner. Learned counsel for the respondent refers to Rule 9(4), particularly the deployment of the word ‘may’ herein, that according to him, grants discretion to the authority to assign reasons. This submission is only stated to be rejected.  The word ‘may’ only refers to the discretion to reject and not to blatantly violate the principles of natural justice. If the assessing authority is inclined to reject the application, which he is entitled to, he must assign reasons for such objection and adhere to proper procedure, including due process.

In light of the above discussion, the impugned order is set aside. Let the petitioner be heard on the objection raised and orders be passed on the application for registration within a period of four (4) weeks from today. This writ petition is allowed.

Conclusion

The proper procedure for rejection of GST registration should be followed. It should not be cryptic and a non-speaking order.

B.C.Mohankumar-Vs-Superintendent-of-Central-Goods-Service-Tax-Madras-High-Court

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