If opportunity of Hearing not provided order cancelling GST Registration not valid
Fact and Issue of the case
Before this Court ventures into the actual controversy, which has been raised by the learned counsel for the petitioner, certain references, to the relevant provisions becomes imminent to be considered, which deals with the aspect of cancellation or suspension of the registration, particularly, that as contained under Section 29 of the Central Goods and Services Tax Act, 2017
The learned Senior Counsel for the petitioner, Mr. S.K. Posti, wants to contend that once he himself as a partner of a partnership firm has submitted an application for cancellation of his GST registration No.GSTIN05AAGFE8721Q1ZZ, which was filed on 30th May, 2020, in that eventuality, under Sub-rule (3) of Rule 22 of the Rules framed under the Act, the decision on the application submitted for the cancellation of the registration was required to be taken by respondent No.2, within a period of 30 days as provided therein. In case, if no decision is taken, within a period of 30 days, in that eventuality, the respondent No.2, becomes functus officio, to pass any order on the application which was submitted by the person concerned for cancellation of the registration and hence, any subsequent cancellation of registration after the expiry of the aforesaid period would be without jurisdiction.
Observation of the court
Rule 22 of the Rules is extracted hereunder :-
“22. Cancellation of registration. -(1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29, he shall issue a notice to such person in FROM GST REG-17, requiring him to show cause, within a period of seven working days from the dale of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG-18 within the period specified in the said sub-rule.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19. within a period of thirty days from ilk-date of application submitted under rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any lax, interest or penalty including the amount liable to be paid under sub-section (5) of section 29.
(4) Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG-20.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself”
The second limb of argument of the learned counsel for the petitioner is that, even if at all a decision was required to be taken on an application submitted by the petitioner on 30th May, 2020, requesting for the cancellation of the registration, if at all, the decision was required to be taken after the expiry of the period of 30 days, as provided under Sub-rule (3) of Rule 22 of the Rules, in that eventuality too, the implications of Sub-section (2) of Section 29 of the Act, ought to have been followed and the petitioner should have been mandatorily provided with an opportunity of hearing and in the absence of there being any prior show cause issued to the petitioner, calling his explanation, the order of cancellation of his registration would be apparently and statutorily bad in the eyes of law.
Even if the impugned order of 12th July, 2021, is taken into consideration, there is not even a single whisper that after the expiry of 30 days, as provided under Sub-rule (3) Rule 22, when the cancellation was being resorted to, though apart from the fact that the office concerned has become functus officio after the expiry of 30 days, even if at all, the cancellation was required, in that eventuality, then the petitioner ought to have been heard.
On these short premise, the learned counsel for the parties agreed that because the order impugned apparently suffers from the violation of a statutory provisions of non-providing of any opportunity as contemplated under Sub-section (2) of Section 29 of the Act, with the consensus of the parties, the impugned order is quashed.
The Writ Petition is allowed. The matter is remitted back to the respondent No. 2, to take an appropriate action and decision thereon too, only after providing an opportunity of hearing to the petitioner and the decision on the same would be taken within a period of 30 days from the date of service of the certified copy of this order.
The petition is hereby alowed in favour of the petitioner