THE Bombay High Court held that since the revocation orders for cancellation of registration at the instance of the petitioner were passed contrary to the principles of natural justice, all subsequent proceedings initiated thereafter, which are consequential, shall be set aside.

“Prior to the revocation of the cancellation of registration, the applicant was not provided with the documents on the basis of which his application for cancellation of registration was rejected, which is contrary to the principles of natural justice.», observed the division bench of Justice MS Sonak And Justice Jitendra Jain.

Facts of the case

On June 28, 2021, the CGST Authority issued a registration certificate to the respondents in Form GST REG-06. However, on May 9, 2023, the petitioner/assessee voluntarily applied for cancellation of registration in Form GST REG-16. Following this request, the CGST authorities canceled the registration of the petitioner. Later, on February 20, 2024, the CGST sent an email to the petitioner stating that the quashing order has been revoked in accordance with the orders received from the Appellate Authority/Higher Authority for reinstatement of the order. ‘cancelation. On the same day, an order was issued denying petitioner’s request for voluntary cancellation of registration dated May 9, 2023.

Subsequently, on February 26, 2024, the CGST Authority issued a show cause notice to the petitioner explaining why the registration should not be canceled on the ground that the same was obtained by fraud, deliberate misrepresentation or suppression of facts in accordance with in Sec. 29(2)(e) of the CGST Act, 2017. Later, on March 8, 2024, an order for cancellation of registration was passed with retrospective effect from June 27, 2020. After being challenged by the petitioner, it was responded by CGST Commissioner Dy said that the canceled registration was reinstated and then canceled ab initio as per the instructions of the state GST authorities.

When the petitioner was advised by the CGST authorities to obtain a NOC from the State GST authorities for revocation or cancellation of registration, the petitioner approached the High Court.

High Court observation

The bench noted that the request for voluntary cancellation of the petitioner’s registration was accepted by the respondents and the cancellation came into effect on May 8, 2023.

After almost 10 months, without giving any hearing or show cause notice for the revocation of the voluntary cancellation of registration, the respondents revoked the cancellation on the ground that the same is being done in accordance with the orders received from the authority of appeal/higher authority, the bench added.

However, the bench held that the identity of this appellate authority/higher authority or the contents of the order was not disclosed to the petitioner anywhere at that time but much after the order of cancellation has been made.

The judges said the onus was on the respondents to issue a show cause notice for revocation of cancellation of registration before passing the order.

Having not issued any show cause notice, reinstatement of voluntary cancellation of registration is contrary to the principles of natural justice, the bench added.

Even though the GST REG-05 form rejecting the application for voluntary cancellation of registration was reasoned, the bench concluded that the said form does not contain any reason and the space following the expression “following reason” is empty.

Therefore, the rejection of the application for voluntary cancellation of registration is contrary to the principles of natural justice since it contains no motivation, and the omission is indicative of lack of mind, the bench added.

The High Court therefore set aside the order only because the decision-making process was flawed.

However, due to a failure of natural justice, the High Court granted the respondents liberty to proceed in accordance with law.

Further, accepting the respondent’s apprehensions that the petitioner might use the ITC to his credit and attempt to render subsequent proceedings infructuous, the High Court restrained the petitioner from using that ITC for a reasonable period during which the respondents should conclude their procedure. .

Counsel for the petitioner/assessee: Sujit Sahoo

Respondent/Revenue Advisors: SD Vyas, Dhruti Kapadia, Ram Ochani and Abhishek R. Mishra

Case Title: Om Impex v. State of Maharashtra & Ors

File Number: Writ Petition No. 11541 OF 2024

Click here to read/download the prescription