Simplified Explanation of the Judgment
In a recent judgment dated 09 December 2022, the Patna High Court allowed a writ petition filed by a business whose Goods and Services Tax (GST) registration had been cancelled by the tax authorities in Purnea, Bihar. The petitioner challenged the cancellation order as well as the subsequent dismissal of their appeal by the appellate authority.
The main grievance of the petitioner was that their GST registration was cancelled via an ex parte (one-sided) order dated 19.12.2019 issued by the Joint Commissioner of State Tax, Purnea. This cancellation order was allegedly passed without granting the petitioner a proper opportunity to be heard. The appellate authority also dismissed the petitioner’s appeal on technical grounds—primarily on the delay in filing the appeal and failure to attach a certified copy of the cancellation order.
The petitioner argued that they had been complying with all tax-related formalities since their registration in 2017, including regular filing of GST returns. Due to the COVID-19 pandemic, there was a lapse in uploading returns for a certain period, which was beyond the petitioner’s control. Their GST compliance was handled by a tax consultant, and the issue was a result of unforeseen disruptions during the pandemic.
After reviewing the facts, the Court observed that the cancellation order was not only cryptic and non-speaking, but it also failed to explain the reasons for such cancellation. This, the Court held, was a clear violation of the principles of natural justice. The tax authority had neither acknowledged the petitioner’s reply to the show cause notice nor detailed the rationale behind the registration cancellation.
Highlighting that such cancellation has serious civil and penal consequences, the High Court quashed the cancellation order dated 19.12.2019. The Court further ordered the immediate restoration of the petitioner’s GST registration.
In a significant part of the judgment, the Court stated that the issue of delay in filing GST returns would not be reopened, as this had already been clarified by the Government Pleader during the hearing.
Significance or Implication of the Judgment
This ruling is significant for small and medium businesses in Bihar and across India who face procedural setbacks in the GST system, especially during unforeseen crises like the COVID-19 pandemic. It reinforces the principle that no adverse order affecting civil rights should be passed without giving the affected party a fair chance to respond. The judgment also sets a precedent that technical defaults—such as filing delays during emergencies—should not result in severe penal consequences when the taxpayer shows willingness to comply.
Legal Issue(s) Decided and the Court’s Decision
- Was the GST registration cancelled without following due process?
- Yes. The Court held that the cancellation order violated the principles of natural justice.
- Did the appellate authority err in dismissing the appeal on procedural grounds?
- Yes. The Court found that substantive justice was ignored over minor procedural lapses.
- Should the registration be restored and proceedings regularized?
- Yes. The Court ordered restoration of GST registration and directed that assessment be completed in accordance with law.
Case Title
M/s Best Bricks v. The Union of India & Others
Case Number
Civil Writ Jurisdiction Case No. 16203 of 2022
Citation(s)– 2023 (1) PLJR 203
Coram and Names of Judges
Hon’ble the Chief Justice Sanjay Karol
Hon’ble Mr. Justice Partha Sarthy
Names of Advocates and who they appeared for
Mr. Anurag Saurav, Advocate — for the Petitioner
Mr. Abhinav Alok, Advocate — for the Petitioner
Mr. Vivek Prasad, GP-7 — for the Respondents
Link to Judgment
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