Simplified Explanation of the Judgment
The Patna High Court recently ruled in favor of a petitioner whose GST registration was cancelled without adequate opportunity to be heard. The case involved a brick manufacturing firm based in Purnea, Bihar. The petitioner challenged two main actions: the ex-parte cancellation of their GST registration and the rejection of their appeal on technical grounds.
The petitioner argued that their GST registration was cancelled on 19th December 2019 by the Joint Commissioner of State Tax, Purnea Circle, without a proper hearing or reference to any submitted explanation. The notice for cancellation was issued, but the department recorded that the petitioner had not replied—despite evidence of a response. Moreover, the cancellation order did not mention any specific reason or discuss the petitioner’s explanation. This omission amounted to a violation of the principles of natural justice.
The petitioner then appealed this cancellation. However, the appeal was dismissed by the Additional Commissioner (Appeal) on the grounds that it was filed after the 90-day statutory period, and that the certified copy of the impugned order was not submitted. These procedural lapses were held against the petitioner, despite the larger issue of no tax dues and the cancellation being based on a non-speaking order.
The High Court emphasized that the cancellation had serious civil and penal implications and that the original order was cryptic and non-speaking. The Court also noted that the petitioner had been filing returns and paying taxes regularly since 2017 through a tax consultant. The lapse in filing returns for a certain period occurred due to disruptions caused by the COVID-19 pandemic, a factor considered beyond the petitioner’s control.
Considering the cumulative facts, the Patna High Court quashed the cancellation order and restored the petitioner’s GST registration. The Court also instructed the tax authorities to assess and pass further orders in accordance with law, and directed that the issue of delayed return filing shall not be raised again.
Significance or Implication of the Judgment
This judgment has significant implications for small and medium enterprises (SMEs), particularly those impacted by the COVID-19 pandemic. It reinforces the importance of following the principles of natural justice in tax proceedings. The decision sets a precedent that GST registration cannot be cancelled in a routine or mechanical manner without offering a fair hearing and providing detailed reasoning.
The ruling is a relief to many businesses that may have faced technical defaults or delays due to unforeseen circumstances. It also sends a clear message to tax authorities that procedural fairness must be upheld, especially when an action results in civil or penal consequences.
Legal Issue(s) Decided and the Court’s Decision
- Whether GST registration can be cancelled without giving a proper opportunity of hearing?
- Decision: No. The cancellation order was quashed due to violation of principles of natural justice.
- Whether delay in filing an appeal and failure to submit certified copies can override the substantive justice?
- Decision: No. The Court overlooked procedural lapses to uphold fairness and legality.
- Whether technical lapses during the COVID-19 pandemic can justify cancellation of GST registration?
- Decision: No. The Court acknowledged COVID-19 disruptions as a valid reason for delay in return filing.
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
MTUjMTYyMDMjMjAyMiMxI04=-lFwFx9Q6ue4=
If you found this explanation helpful and wish to stay informed about how legal developments may affect your rights in Bihar, you may consider following Samvida Law Associates for more updates.
