Gauhati High Court
WP(C)/6671/2024 on 20 February, 2025
Author: Manish Choudhury
Bench: Manish Choudhury
Page No.# 1/13
GAHC010265962024
2025:GAU-AS:2454
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WRIT PETITION (C) NO. 6671/2024
Sri Rajib Sharma, Son of Sri Ram Sharma,
Resident of Laxminagar, P.O., P.S. &
District - Sivasagar, Assam, 785640.
..................Petitioner
-VERSUS-
1. The Union of India, Represented by the
Secretary to the Government of India,
Department of Finance.
2. The Principal Commissioner of Central
Goods and Service Tax, Dibrugarh -
781001, Assam.
3. The Superintendent, Central Goods &
Service Tax, Sibasagar-5, Sibasagar,
Sibasagar Zone, Assam.
...................Respondents
Advocates :
Petitioner : Mr. R.S. Mishra, Advocate
Respondents : Mr. S.C. Keyal, Standing Counsel, CGST
: Mr. K. Jain, Advocate.
Date of Hearing, Judgment & Order : 20.02.2025
Page No.# 2/13
BEFORE
HON'BLE MR. JUSTICE MANISH CHOUDHURY
JUDGMENT & ORDER [Oral]
The petitioner has approached this Court by the instant writ petition,
preferred under Article 226 of the Constitution of India, on the premise that his
GST Registration under the Central Goods and Services Tax [CGST] Act, 2017
has been cancelled by an Order dated 09.08.2020 pursuant to issuance of a
Show Cause Notice dated 27.07.2020. The assail is made inter-alia on the
grounds that the manner in which the GST Registration has been cancelled is
arbitrary and the impugned Order of cancellation has been passed without due
application of mind.
2. It is the case of the petitioner that he is the sole proprietor of a firm by the
name, M/s JNK Enterprise and in order to carry out his business, he got himself
registered as a dealer under the Central Goods and Services Tax [CGST] Act,
2017/Assam Goods and Services Tax [AGST] Act, 2017. It is stated that when
the petitioner applied for registration, the petitioner was issued a Registration
Certificate in Form GST 06 with Registration no. 18ATVPS2934D2Z6 w.e.f.
18.05.2018.
3. The petitioner was issued the Show Cause Notice on 27.07.2020 by the
Proper Officer asking him to show cause as to why the Registration Certificate
issued to him under the CGST Act should not be cancelled due to non-filing of
returns for a continuous period of six months. The petitioner was thereby,
directed to furnish a Reply to the Show Cause Notice within seven working days
from the date of service of the Show Cause Notice. It was further mentioned
that if the petitioner would fail to furnish a reply within the stipulated date or
would fail to appear for personal hearing on the appointed date and time, the
Page No.# 3/13
case would be decided ex parte on the basis of the materials available on record
and on merits.
4. Thereafter on 09.08.2020, the impugned Order came to be passed whereby
the petitioner's GST Registration has been cancelled w.e.f. 09.08.2020.
5. In view of the issue raised in this writ petition, notice be issued. As all the
parties are represented, the notice is made returnable immediately at the
request of and with the consent of the learned counsel for the parties.
6. I have heard Mr. R.S. Mishra, learned counsel for the petitioner and Mr. K.
Jain, learned counsel representing Mr. S.C. Keyal, learned Standing Counsel,
CGST for all the respondents.
7. Mr. Mishra, learned counsel for the petitioner has submitted that pursuant
to the Show Cause Notice, which was uploaded in the common portal, the
petitioner could not submit his Reply due to reasons beyond his control. He has
submitted that due to onset and continuance of Covid-19 pandemic, the
petitioner could not submit the returns, required to be submitted under Section
39[1] of the CGST Act, during the relevant period for a continuous period of six
months or more. Sufferance of huge financial loss during that period was the
primary reason for not filing the returns in time. He has further submitted that
as soon as the financial condition of the petitioner improved slightly, the
petitioner submitted his returns up-to August, 2020, as allowed by the GST
portal. Though the petitioner tried to submit an application for revocation, the
GST portal did not allow submission of such application as the time-line of 270
days from the date of cancellation was already over by then. Similarly, the
petitioner could not prefer an appeal due to expiry of the statutory period of
limitation.
Page No.# 4/13
7.1. Mr. Mishra has submitted that the impugned Order of cancellation of GST
Registration is to be passed in Form GST REG 19 and the proper officer while
cancelling as assessee's GST Registration, has to assign the reasons for
cancellation of registration. But, the impugned Order dated 09.08.2020 is a
non-speaking and cryptic one. Further, the Order mentioned about submission
of a Reply by the petitioner on 06.08.2020 and also about his attending
personal hearing, whereas, the petitioner did not submit any written Reply nor
he had appeared before the proper officer for any kind of personal hearing in
between 27.07.2020 and 09.08.2020. He has further submitted that by the
Show Cause Notice dated 27.07.2020, it was the officer who issued the Notice,
had to appoint the time and date for personal hearing of the noticee, but no
such date and time for personal hearing was appointed by him. He has further
contended that the impugned Order of cancellation was not on merits, as
required to be decided by the proper officer. Thus, the impugned Order is
clearly an action which is demonstrative of non-application of mind on the part
of the proper officer.
8. Mr. Jain, learned counsel for the respondents has submitted that apart from
the default made by the petitioner in not filing his returns for a continuous
period of six months and more, the petitioner did not file his returns when by
Notification no. 03/2023-Central Tax dated 31.03.2023 and Notification no.
23/2023-Central Tax dated 17.07.2023, the period to apply for revocation of
cancellation of registration was extended up-to 30.06.2023 and 31.08.2023
respectively to a registered person. He has further submitted that the petitioner
did not submit an appeal under Section 107, CGST Act in time and such facts go
to demonstrate that the petitioner himself was not vigilant.
9. I have considered the submissions of the learned counsel for the parties
and have also gone through the materials brought on record, apart from the
relevant provisions of the CGST Act, 2017 and the CGST Rules, 2017 on which
the learned counsel for the parties have relied on.
Page No.# 5/13
10. Section 39[1] of the CGST Act, 2017 inter-alia requires a registered person
to furnish a return for every calendar month or part thereof, electronically, of
inward and outward supplies of goods or services or both, input tax credit
availed, tax payable, tax paid and such other particulars, in such form and
manner, and within such time, as may be prescribed. Rule 61[1] of the CGST
Rules, 2017 has prescribed the Form and manner of furnishing of return
electronically through the common portal either directly or through a notified
Facilitation Centre, as specified under sub-section [1] of Section 39 of the CGST
Act, 2017.
11. As per Section 29[2][c], an officer, duly empowered, may cancel the GST
registration of a person from such date, including any retrospective date, as he
deems fit, where any registered person, has not furnished returns for such
continuous tax period as may be prescribed. As per Rule 21[h] of the CGST
Rules, 2017, registration granted to a person is liable to be cancelled, if the said
person being a registered person required to file returns under sub-section [1]
of Section 39 for each month or part thereof, has not furnished returns for a
continuous period of six months.
12. Rule 22 of the CGST Rules, 2017 has laid down the procedure for
cancellation of the registration. For ready reference, Rule 22 of the CGST Rules,
2017 is quoted herein below :-
Rule 22 : Cancellation of Registration
[1] Where the proper officer has reasons to believe that the registration
of a person is liable to be cancelled under Section 29, he shall issue a
notice to such person in FORM GST REG-17, requiring him to show
cause, within a period of seven working days from the date of the
Page No.# 6/13
service of such notice, as to why his registration shall not be
cancelled.
[2] The reply to the show cause notice issued under sub-rule [1] shall be
furnished in FORM REG-18 within the period specified in the said
sub-rule.
[3] Where a person who has submitted an application for cancellation of
his registration is no longer liable to be registered or his registration is
liable to be cancelled, the proper officer shall issue an order in FORM
GST REG-19, within a period of thirty days from the date of
application submitted under sub-rule [1] of Rule 20 or, as the case
may be, the date of the reply to the show cause issued under sub-rule
[1], or under sub-rule [2A] of Rule 21A, cancel the registration, with
effect from a date to be determined by him and notify the taxable
person, directing him to pay arrears of any tax, interest or penalty
including the amount liable to be paid under sub-section [5] of Section
29.
[4] Where the reply furnished under sub-rule [2] or in response to the
notice issued under sub-rule [2A] of Rule 21A is found to be
satisfactory, the proper officer shall drop the proceedings and pass an
order in FORM GST REG-20 :
Provided that where the person instead of replying to the notice
served under sub-rule [1] for contravention of the provisions
contained in Clause [b] or Clause [c] of sub-section [2] of section 29,
furnishes all the pending returns and makes full payment of the tax
dues along with applicable interest and late fee, the proper officer
shall drop the proceedings and pass an order in FORM GST REG-20.
[5] The provisions of sub-rule [3] shall, mutatis mutandis, apply to the
legal heirs of a deceased proprietor, as if the application had been
submitted by the proprietor himself.
Page No.# 7/13
13. Sub-rule [1] of Rule 22 of the CGST Rules has inter alia prescribed that
where the proper officer has reasons to believe that the registration of a person
is liable to be cancelled under Section 29, he shall have to issue a notice to such
person in FORM GST REG-17, requiring him to show cause, within a period of
seven working days from the date of the service of such notice, as to why his
registration shall not be cancelled. Then, the registered person can furnish, as
per sub-rule [2], his reply to the show cause notice in FORM GST REG-18 within
the period specified, that is, within seen working days.
14. Sub-rule [3] of Rule 22 has inter alia prescribed that where in respect of a
registered person the registration is liable to be cancelled, the proper officer
shall issue an order in FORM GST REG-19 with a period of thirty days from the
date of the reply to the show cause notice issued under sub-rule [1], cancelling
the registration with effect from a date to be determined by him and notifying
the taxable person to pay arrears of any tax, interest or penalty. It is implicit in
sub-rule [3] that the reply submitted by the person has to be unsatisfactory.
15. Sub-rule [4] of Rule 22 has stated that where the reply furnished under
sub-rule [2] is found to be satisfactory, the proper officer shall drop the
proceedings and pass an order in FORM GST REG -20.
16. Reverting back to the Show Cause Notice dated 27.07.2020 issued in the
case in hand, it is noticed that the petitioner was asked to show cause as to
why his GST Registration shall not be cancelled for non-filing of return for a
continuous period of six months. The month since when and the period during
which the petitioner did not file the monthly returns were not mentioned in the
Show Cause Notice. The petitioner was also directed to furnish a reply to the
notice within seven working days from the date of service of the Show Cause
Notice. The Show Cause Notice further provided that if the petitioner as the
noticee would fail to furnish a reply within the stipulated date or fail to appear
Page No.# 8/13
for personal hearing on the appointed date and time, the case would be decided
ex parte on the basis of available records and on merits.
17. When the contents of the Show Cause Notice dated 27.07.2020 and the
contents of the impugned Order dated 09.08.2020 are read together, it is found
that the proper officer has made mention of a reply dated 06.08.2020 submitted
from the petitioner's end in response to the Show Cause Notice dated
27.07.2020. The proper officer has gone on to observe that he examined the
reply received from the petitioner and considered the submissions made by the
petitioner at the time of personal hearing. On the other hand, the petitioner had
asserted that there was no reply submitted from his end and the petitioner did
not attend any personal hearing before the proper officer. In view of such
projections, the learned Standing Counsel, CGST was asked, on 05.02.2025, to
place a copy of the reply dated 06.08.2020 and the attendance sheet recording
appearance of the petitioner before him for personal hearing. Despite granting
opportunity to produce the above documents, no such documents have been
produced before the Court.
18. By the Show Cause Notice dated 27.07.2020, the proper officer had himself
mentioned that the petitioner as the noticee, would have to appear for personal
hearing on the date and time appointed by him. Nothing has been submitted to
the effect that the proper officer had, at any time, informed the petitioner-
noticee about the time and date appointed by him for personal hearing.
Meaning thereby, the petitioner-noticee was never informed of any date or time
of personal hearing.
19. It has been laid down in sub-rule [3] of Rule 22 that the empowered officer
has to pass an Order under Section 29[2] of the CGST Act read with Rule 22[3]
of the CGST Rules in FORM GST REG-19. For ready reference, the contents of
Form GST REG 19 is extracted herein below :-
Page No.# 9/13
FORM GST REG-19
Reference No................ Date ..............
To
Name
Address
GSTIN/UIN
Application Reference Number [ARN]
Order for Cancellation of Registration
This has reference to show cause notice issued dated ................
Whereas no reply to the show cause notice has been submitted;
and whereas, the undersigned based on record available with this office is of the
opinion that your registration is liable to be cancelled for following reason[s]: or
Whereas reply to the show cause notice has been submitted vide <ARN Number>
dated......................;
and whereas, the undersigned on examination of your reply to show cause notice and
based on record available with this office is of the opinion that your registration is
liable to be cancelled for following reason[s]: or
Whereas no reply to the show cause notice has been submitted and on day fixed for
personal hearing, you did not appear in person or through an authorised
representative, and whereas, the undersigned based on record available with this
office is of the opinion that your registration is liable to be cancelled for following
reason[s]: or
Whereas no reply to the show cause notice has been submitted, but you/your
authorised representative attended the personal hearing and made a written or verbal
submission; and whereas, the undersigned on examination of your written or verbal
submission made during personal hearing and based on record available with this
office is of the opinion that your registration is liable to be cancelled for following
reason[s]: or
Page No.# 10/13
Whereas reply to the show cause notice has been submitted vide <ARN Number>
dated......... But, you or your authorised representative did not attend the personal
hearing on scheduled or extended date;
and whereas, the undersigned on examination of your reply to show cause notice and
based on record available with this office is of the opion that your registration is liable
to be cancelled for following reason[s]: or
Whereas reply to the show cause notice has been submitted vide <ARN Number>
dated...... and you/your authorised representative attended the personal hearing,
made a written/oral submission during personal hearing;
and whereas, the undersigned has examined your reply to show cause notice as well
as submissions made at the time of personal hearing and is of the opinion that your
registration is liable to be cancelled for following reason[s]:
i.
ii.
The effective date of cancellation of your registration is <<DD/MM/YYYY>>.
2. Kindly refer to the supportive document[s] attached for case specific details.
3. It may be noted that a registered person furnishing return under sub-section [1] of
section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-
10 within three months of the date of this order.
4. You are required to furnish all your pending returns.
5. It may be noted that the cancellation of registration shall not affect the liability to pay
tax and other dues under this Act or to discharge any obligation under this Act or the
rules made thereunder for any period prior to the date of cancellation whether or not
such tax and other dues are determined or after the date of cancellation.
Place :
Date :
Signature
<Name of the officer>
Designation
Jurisdiction.
Page No.# 11/13
20. Under the GST regime a registered assessee is required to pay the statutory
dues under the CGST Act or the AGST Act, as the case may be, or both. These
statutory dues are required to be paid by all the assessees, who are registered
under the GST regime, mandatorily. Such payments of statutory dues contribute
towards the State Exchequer. If an assessee like the petitioner is not included
within the GST regime, then any statutory dues that may be required to be
deposited by an assessee like the petitioner would not be deposited and properly
accounted for and such a situation is, albeit, not in the interest of the revenue.
21. At the same time, cancellation of GST registration would entail adverse civil
consequences to the person affected as due to cancellation of his registration
under the GST regime, he would be outside it and it would be difficult for the
person to carry on any business in a valid manner. It is not in doubt that the
impugned Order dated 09.08.2020 whereby the petitioner's GST registration has
been cancelled is an order which has the consequence of bringing adverse civil
consequences to the petitioner.
22. When the contents of the impugned Order dated 09.08.2020 are looked at,
it is found that in the impugned Order, the proper officer has mentioned that the
impugned Order is in reference to the petitioner's reply dated 06.08.2020 in
response to the Notice to Show Cause dated 27.07.2020. The proper officer has
further proceeded to observe that when he examined the petitioner's reply and
submissions made at the time of hearing, he had formed an opinion that the
petitioner's registration was liable to be cancelled for the following reason[s] :- 1.
Approved.
23. On perusal of the impugned Order, it is evidently clear that the impugned
Order is not in conformity with the procedure prescribed in FORM GST REG-19.
The reason :- 1. Approved cannot be termed, by any stretch, as a self-speaking
one. Any order which entails adverse civil consequences has to be a speaking
order. A speaking order is one which expressly states the reasons for the
Page No.# 12/13
decision. In other words, a speaking order speaks for itself by assigning the
reasons behind the conclusion. If an order is passed without giving a reason by
concerned authority, then the order is a non-speaking one. Non-speaking order is
one which does not provide a clear reason for its decision. The fact that the
petitioner-assessee did not submit any reply to the Show Cause Notice dated
27.07.2020 or did not appear before the proper officer, if he was called upon to
do so, does not absolve the proper officer of the obligation of passing a speaking
order as any order which brings adverse civil consequence to a person cannot be
a mere paper formality. A look at FORM GST REG-19 also goes to substantiate
the same. Thus, from every standpoint, the impugned Order dated 09.08.2020 is
not a speaking order. As such, the impugned Order dated 09.08.2020 is found to
be one which is passed without any application of mind. For the afore-stated
reasons, the impugned Order dated 09.08.2020 cannot stand the scrutiny of law
and is liable to be set aside and quashed. It is accordingly set aside and quashed.
24. With the setting aside and quashing of the impugned Order dated
09.08.2020, the matter stands reverted back to the stage of issuance of the
Show Cause Notice in FORM GST REG-17.
25. It is discernible from a reading of the proviso to sub-rule [4] of Rule 22 of
the CGST Rules, 2017 that if a person who has been served with a Show Cause
Notice under Section 29[2][c] of the CGST Act, 2017 is ready and willing to
furnish all the pending returns and to make full payment of the tax dues along
with applicable interest and late fee, the proper officer, shall drop the
proceedings and pass an order in the prescribed Form, that is, Form GST REG-
20.
26. In the fact situation obtaining in the case in hand, it is open for the
petitioner-assessee to submit a reply to the Show Cause Notice dated 27.07.2020
showing reason[s] as to why the GST Registration should not be cancelled in
terms of sub-rule [2] of Rule 22 of the CGST Rules read with Section 29[2][c] of
Page No.# 13/13
the CGST Act. In the alternative, the petitioner-assessee, at the time of and/or
instead of replying to the Show Cause Notice served under sub-rule [1] of Rule
22 of the CGST Rules, can furnish all the pending returns and make full payment
of the tax dues along with the applicable interest and late fee. It is observed that
liberty stands granted to the petitioner-assessee to avail either of the two
options. This Court, for ends of justice, deems it just and proper to grant a
period of one month from today to the petition to avail either of the two
permissible options. It is further observed that depending on the option availed
by the petitioner-assessee, the proper officer shall proceed thereafter, in
accordance with the procedure prescribed in Section 29 of the CGST Act and Rule
22 of the CGST Rules to bring the process to its logical conclusion by passing
appropriate order either in FORM GST REG-19 or FORM GST REG-20, as the case
may be, as expeditiously as possible, preferably within a period of one month
thereafter.
27. With the observations made and the directions given, the writ petition
stands allowed to the extent indicated above. There shall, however, be no order
as to cost.
JUDGE
Comparing Assistant
