Facts
The petitioner, a private limited company operating a rice mill, was registered under the CGST/SGST Act w.e.f. 31.05.2023
Source reference: p. 2On 12.03.2024, the Proper Officer issued a Show Cause Notice (SCN) proposing to cancel the petitioner’s registration for failure to furnish returns for a continuous period of six months
Source reference: p. 3While the SCN directed a reply within 30 days and a personal appearance on 09.04.2024, the petitioner failed to respond due to a communication gap with its tax consultant
Source reference: p. 3Consequently, on 16.04.2024, the Proper Officer passed an order cancelling the registration w.e.f. 12.03.2024
Source reference: p. 3The petitioner challenged this order as being arbitrary, non-speaking, and passed without application of mind
Source reference: p. 2, 4Issues
1. Whether the Show Cause Notice dated 12.03.2024 met the legal requirements of providing a precise and effective opportunity to be heard
Source reference: p. 72. Whether the impugned Order dated 16.04.2024 is legally sustainable given the absence of recorded reasons for cancellation
Source reference: p. 8Law Applied
Section 29(2)(c) of the CGST Act, 2017, which empowers officers to cancel registration for non-filing of returns for a prescribed period
Source reference: p. 4Rule 21(h) and Rule 22 of the CGST Rules, 2017, which mandate the procedure for cancellation, specifically requiring the issuance of notice in FORM GST REG-17 and an order in FORM GST REG-19
Source reference: p. 4-6The principle of natural justice, holding that an adjudicating authority must record reasons for its decision to prevent arbitrary action, especially when it entails adverse civil consequences
Source reference: p. 9Reasoning
The court found that the SCN was deficient as it failed to specify the exact months or period of default, thereby depriving the petitioner of a "precise case" to respond to
Source reference: p. 7Crucially, the court observed that the cancellation order dated 16.04.2024 was "non-speaking and cryptic," as it merely referenced the SCN without assigning any actual reasons for the decision
Source reference: p. 7-8The court noted that FORM GST REG-19 explicitly requires the recording of reasons
Source reference: p. 8It reasoned that while the petitioner was negligent in not replying to the SCN, this did not absolve the Proper Officer of the statutory and constitutional obligation to pass a reasoned order showing application of mind
Source reference: p. 9The court further held that the vulnerability of the order due to statutory breaches outweighed the petitioner's delay in approaching the court
Source reference: p. 9-10Holding
The court allowed the writ petition, setting aside and quashing the impugned Order dated 16.04.2024 on the grounds of jurisdictional error and lack of application of mind
The matter was remanded to the stage of the Show Cause Notice, directing that the petitioner be given one month to either reply to the SCN or avail the benefit of the proviso to Rule 22(4) by filing all pending returns and paying all dues. The Proper Officer was directed to provide details of outstanding dues if requested and pass a fresh, reasoned order in FORM GST REG-19 or REG-20 within one month of the petitioner's response
Source reference: p. 10-11Original Court PDF
Boldridge Private LimitedvsThe Union Of India And Ors
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