GST cancellation proceedings require a meaningful opportunity of hearing before adverse action is taken.

The petitioner, a proprietorship concern registered under the BGST Act, failed to file its monthly returns for approximately six months due to the proprietor’s illness and resulting inability to manage the business.

The tax authorities issued a show-cause notice dated 6 February 2024 proposing cancellation of the petitioner’s GST registration, requiring a reply within 30 days, while fixing a personal hearing for 5 March 2024—before expiry of the reply period.

No reply was submitted, allegedly because the petitioner’s consultant failed to communicate the notice. The registration was cancelled ex parte by order dated 22 April 2024.

Subsequently, the petitioner filed the pending GSTR-3B and GSTR-1 returns on 26 May 2025 and paid the tax dues, late fee and penalty.

Its appeal, filed on 16 June 2025, was dismissed as time-barred by the Additional Commissioner (Appeals) on 21 July 2025.

Whether the cancellation of the petitioner’s GST registration was legally sustainable when the personal hearing was fixed before expiry of the period granted for filing the show-cause reply, thereby rendering the opportunity of hearing an empty formality?

Whether the appellate order dismissing the petitioner’s appeal solely on the ground of limitation should be set aside in the circumstances of the case?

Whether the petitioner should be permitted to seek revocation of cancellation of its GST registration despite the delay?

The Court applied Section 75(4) of the Bihar Goods and Services Tax Act, 2017, which requires that an opportunity of hearing be granted where a hearing is requested in writing or where an adverse decision is contemplated against the person chargeable with tax or penalty.

The Court held that where a show-cause notice grants time for filing a response, the hearing must be meaningfully afforded and cannot be reduced to an empty formality by fixing it before expiry of the response period.

The Court also relied on its earlier decision in M/s Galaxy Heights v. Union of India & Others, CWJC No. 4204 of 2025, recognising that permanent cancellation of GST registration may inflict “civil death” on a person’s livelihood and warrant judicial intervention in appropriate cases.

The Court acknowledged that the petitioner had failed to file returns for six months, which could attract cancellation proceedings.

However, the authorities issued the show-cause notice on 6 February 2024, allowed 30 days for filing a reply, and nevertheless fixed the personal hearing for 5 March 2024, before the reply period had expired.

Applying Section 75(4), the Court held that the hearing requirement must be substantive and effective, particularly where cancellation of registration carries serious consequences for the petitioner’s ability to carry on business.

The Court further considered the petitioner’s subsequent compliance—filing the pending returns and paying taxes, late fee and penalty—as demonstrating bona fides.

In view of these circumstances and the serious livelihood consequences recognised in Galaxy Heights, the Court found it appropriate to interfere with the appellate order and permit the petitioner to pursue statutory revocation notwithstanding limitation.

The competent authority was directed to consider the application on its merits and not reject it solely on the ground of limitation, and to pass an appropriate order within two months of its filing.

The writ petition was accordingly allowed to that extent.