Kerala High Court
M/S. Ajit Associates ... vs Assistant Commissioner on 1 August, 2023
W.P.(C)No.41275/2022
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
TUESDAY, THE 1ST DAY OF AUGUST 2023/10TH SRAVANA, 1945
WP(C) NO. 41275 OF 2022
PETITIONER:
M/S.AJIT ASSOCIATES ARCHITECTURAL CONSULTANTS PVT. LTD.
IIIRD FLOOR, 483 K/40, PUTHURAN PLAZA, M.G. ROAD, KPCC
JUNCTION, ERNAKULAM, PIN - 682011
REPRESENTED BY ITS MANAGING DIRECTOR, B.R. AJIT.
BY ADVS.
SRI HARISANKAR V. MENON
SMT.MEERA V.MENON
SRI R.SREEJITH
SMT.K.KRISHNA
RESPONDENT:
1 ASSISTANT COMMISSIONER
SECOND CIRCLE, STATE GST DEPARTMENT,
ERNAKULAM, PIN - 682018
2 JOINT COMMISSIONER (APPEALS)
STATE GST DEPARTMENT, ERNAKULAM,
PIN - 682018
3 STATE OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT,
TAXES DEPT., GOVT. SECRETARIAT, THIRUVANANTHAPURAM,
PIN - 695001
4 UNION OF INDIA
REPRESENTED BY SECRETARY TO GOVERNMENT, MINISTRY OF
FINANCE (DEPARTMENT OF REVENUE),
NORTH BLOCK, NEW DELHI,
PIN - 110001
DR.THUSHARA JAMES, SENIOR GOVT.PLEADER
SRI S.MANU, DSGI
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
31.3.203, THE COURT ON 01.08.2023 DELIVERED THE FOLLOWING:
W.P.(C)No.41275/2022
2
T.R. RAVI, J.
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W.P.(C)No.41275 of 2022
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Dated this the 1st day of August, 2023
JUDGMENT
The petitioner is a Private Limited Company engaged in
providing architectural services. It is an assessee under the
Goods and Service Tax Act (GST Act for short). They have been
filing their returns and paying the tax regularly till August,2017.
Thereafter, there has been a default in the filing of returns,
which according to the petitioner, was not wilful. It is stated that
by 2022 the petitioner started taking steps to regularise the
returns by filing the defaulted returns, and at that stage it was
realised that the registration under the statute had been
cancelled during the year 2021 pursuant to a show cause notice
issued in 2017. Ext.P1 is the show cause notice dated
05.12.2019. Ext.P2 is the order cancelling the registration,
which was dated 14.12.2020. It is submitted that even though
Ext.P1 had been served on the company, the concerned
accountant who was dealing with the filing of returns did not
bring it to the notice of the management and did not file an
effective reply to the show cause. It is stated that the petitioner
W.P.(C)No.41275/2022
has since filed returns of the defaulted periods from August
2017 onwards and that the returns have been regularised till
February 2021. The petitioner submits that they had filed an
appeal against Ext.P2 order of cancellation registration before
the 2nd respondent, for which there was a delay of 230 days and
an application for condonation of delay has also been filed.
2. In this writ petition, the petitioner challenges Ext.P2
order on the ground that it has been issued without providing an
opportunity for a hearing. Section 29(2) of the Act reads thus:
"S.29(2). The proper officer may cancel the registration of
a person from such date, including any retrospective date,
as he may deem fit, where,-
(a) a registered person has contravened
such provisions of the Act or the rules
made thereunder as may be prescribed:
or
(b) a person paying tax under section 10 has
not furnished returns for three
consecutive return periods: or
(c) any registered person, other than a
person specified in clause (b), has not
furnished returns for a continuous period
of six months: or
(d) any person who has taken voluntary
registration under sub-section (3) of
section 25 has not commenced business
within six months from the date of
W.P.(C)No.41275/2022
registration: or
(e) registration has been obtained by means
of fraud, wilful misstatement or
suppression of facts:
Provided that the proper officer shall not cancel the
registration without giving the person an opportunity of
being heard".
3. As per the proviso, "the proper Officer shall not cancel
the registration without giving a person an opportunity of being
heard." It is contended that the hearing is to be carried out by
the proper Officer and that since the Statute uses the words
"may cancel," it necessarily gives an element of discretion to the
proper officer. It is stated that Ext.P1 show cause notice was
issued way back on 05.12.2019 by the then assessing authority
Smt.P.R.Seema, and Ext.P2 order has been issued by the
succeeding incumbent Smt.T.A.Omana. The contention is that
the succeeding officer, who is the proper officer, has not issued
notice to the petitioner or heard them. It is further submitted
that what is required is the satisfaction of the officer concerned
in order to exercise the discretion to cancel or to not cancel the
registration, and hence the person who is passing the order
necessarily has to hear the petitioner to arrive at a satisfaction.
Another contention taken is that Ext.P2 does not contain the
Document Identification Number (DIN). It is submitted that
W.P.(C)No.41275/2022
going by the Circular issued by the 4th respondent, with effect
from 24.12.2019, every order shall contain a DIN, and Ext.P2
was hence invalid. Another contention stated is that it can be
seen from Ext.P3 that the petitioner has submitted the defaulted
returns, and the cancellation of registration is not required.
4. Heard Sri.Harisankar V. Menon, counsel for the
petitioner and Dr.Thushara James, Sr. Government Pleader.
5. The counsel for the petitioner relied on the decision of
the Full Bench of the Patna High Court in Commissioner of
Wealth-tax v. Sri Jagdish Prasad Choudhary [1995 Vol
211 ITR 472], the judgment of the Calcutta High Court in
Commissioner of Income-tax, West Bengal-IV v. Chitra
Mukherjee [1981 Vol 127 ITR 252], the judgment of the
Andhra Pradesh High Court in Commissioner of Wealth Tax,
A.P. v. Azizunnissa Begum [1979 Vol 119 ITR 376] and the
judgment of the Andra Pradesh High Court in Anantha
Naganna Chetty v. The Commissioner of Income Tax,
Andra Pradesh, Hydradad [AIR 1970 AP 367] in support of
the contention that the succeeding officer was bound to give an
opportunity of hearing to the assessee before cancelling the
registration.
W.P.(C)No.41275/2022
6. A counter affidavit has been filed by the 1st
respondent. It is contended that a separate notice affording an
opportunity is not required in the case of a change of officer. It
is also contended that alternate remedies are available.
7. In the case on hand, admittedly, there has been no
hearing by the Officer who issued Ext.P2 order. Nor was the
petitioner put on notice about such an order being proposed.
The contention of the respondents is that the law only requires a
grant of sufficient opportunity, and the petitioner had been put
on notice, but he did not choose to give any response. It is
hence submitted that since the petitioner Company did not take
the opportunity of hearing, they cannot be heard to say that
there is a violation of the procedure.
8. In Anantha Naganna (supra), the Court was
considering a case of levy of penalty under the Income-tax Act.
That was a case where there was a change of the Income-tax
Officer regarding which the assessee had no intimation. The
provision of law which was considered was Section 28(3), which
read as follows;
"S.28(3). No order shall be made under sub-section
910 or sub-section 920 unless the assessee or partner,
as the case may be, has been heard, or had been given
W.P.(C)No.41275/2022
a reasonable opportunity of being heard."
Considering the said provision, the Court held that it is
obligatory on the part of the authorities imposing a penalty to
hear and give a reasonable opportunity to the assessee before
an order imposing penalty is passed. Regarding the question of
whether the succeeding Officer should hear the assessee,
Section 5(7)(c) of the Act contains a specific provision that if an
Income-tax Authority is succeeded by another authority, the
succeeding authority may continue the proceeding from the
stage where it was left by his predecessor. It also says that the
assessee, in such cases, can demand that the previous
proceeding or any part thereof conducted by the predecessor be
re-opened before the succeeding Officer decides to continue the
proceedings from the stage at which it was left by the
predecessor or ask for a rehearing. The Court, after taking note
of Section 28 and Section 5(7)(c), held that unless the assessee
is put on notice regarding the change of Officer, he does not
even get an opportunity to demand a re-hearing or re-opening.
It was hence found that it is inherent in such circumstances that
the succeeding Officer should inform the assessee about the
proposal to continue the proceedings.
9. In Chitra Mukherjee (supra), the Calcutta High
W.P.(C)No.41275/2022
Court referred to Anantha Naganna (supra) again in a case
arising out of the Income-tax Act and concurred with the view
and held that the assessee had to be given an opportunity of
being heard by the succeeding Officer. Similar is the view taken
in Azisunnissa (supra), which arose under the Wealth Tax Act.
A Division Bench of this Court in Commissioner of Income-
tax v. M.Sreedharan [1991 (190) ITR 604] followed the
judgments Anantha Naganna (supra) and Chitra Mukherjee
(supra) and held that the succeeding Officer has to intimate the
assessee of his intention to continue the proceedings from the
stage at which it was left by his predecessor. Later, a Full Bench
of the Patna High Court in Jagdish Prasad Choudhary
(supra) approved the above said Division Bench judgments and
took the same view.
10. The statutory provision in the case on hand is a little
different. In the cases referred to above, which arose under the
Wealth Tax Act and Income-tax Act, the emphasis was only on
the opportunity of being heard to be given to the assessee
before an order of penalty is issued under Section 28(3) of the
Income Tax Act. Under Section 29(2) of the GST Act, the proviso
also mentions that the proper Officer shall not cancel the
W.P.(C)No.41275/2022
registration without giving an opportunity of being heard, which
is in the nature of an embargo on the officer. The requirement
that the succeeding Officer should put the assessee on notice is
thus better emphasised by the usage of the words "proper
Officer" in the proviso to Section 29(2). The necessary
implication is that the proper officer has to hear the concerned
person before cancelling the registration, which would mean that
the assessee is put on notice by the succeeding officer also.
In view of the law laid down in the aforesaid decisions, with
which I am in respectful agreement, the petitioner is entitled to
relief in this writ petition. The writ petition is allowed. Ext.P2
order is quashed. As the petitioner has already submitted
returns for the periods of default, necessary orders shall be
issued by the respondents, treating the petitioners' registration
as not cancelled.
Sd/-
T.R. RAVI
JUDGE
dsn
W.P.(C)No.41275/2022
APPENDIX OF WP(C) 41275/2022
PETITIONER EXHIBITS
Exhibit P1 COPY OF SHOW CAUSE NOTICE ISSUED BY THE 1ST
RESPONDENT DTD. 05-12-2019
Exhibit P2 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT TO
THE PETITIONER DTD. 14-12-2021
Exhibit P3 COPY OF THE STATEMENT OF THE VARIOUS RETURNS
FILED BY THE PETITIONER DTD. NIL
Exhibit P4 COPY OF CIRCULAR NO. 128/47/2019-GST ISSUED BY
THE 4TH RESPONDENT DTD. 23-12-2019
Exhibit P5 COPY OF ORDER IN WPC NO. 320/2022 OF THE HON'BLE
SUPREME COURT OF INDIA DTD. 18-07-2022
Exhibit P6 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT DTD.
13-12-2022
