'Violation Of Principles Of Natural Justice': Calcutta High Court Orders Restoration Of GST Registration Within 7 Days

The Calcutta High Court on Tuesday ordered for the restoration of the appellant's certificate of registration under the provisions of both West Bengal Goods & Service Tax Act and Central Goods & Service Tax Act within one week after noting that the order for cancellation of registration is in violation of principles of natural justice. 

A Bench comprising Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya observed, 

"The authorities are directed to restore the appellant's certificate of registration under the provisions of both West Bengal Goods & Service Tax Act and Central Goods & Service Tax Act within one week from the date of receipt of the copy of this order. We grant liberty to the authorities to issue show cause notice to the appellant."

The Court further noted that the order of cancellation of the registration made by the state authorities as well as central authorities is unsustainable and the order rejecting the application for revocation dated October 6, 2021 is also not tenable. 

Background 

The appellant had challenged the order dated December 20, 2021 passed by another Bench of the High Court vide which the respondent authorities had been directed to file affidavit-in-opposition while rejecting the prayer to restore the appellant's certificate of registration under the provisions of West Bengal Goods & Service Tax Act and Central Goods & Service Tax Act.

The authorities under the West Bengal Goods & Service Tax Act had issued show cause notice dated June 6, 2018 proposing to cancel the certificate of registration of the appellant on the ground that the appellant had not filed returns for a continuous period of six months.

It was contended that soon after receipt of the notice, the appellant had filed the return for the period and paid the tax. By order dated February 8, 2021 the authorities under the Central Goods & Service Tax Act cancelled the registration certificate of appellant. The order had made a reference to the show cause notice dated June 6, 2018 which was issued by the state authorities. Thereafter, the appellant sought for revocation of the order for canceling appellant's registration. 

Consequently, the state authorities issued show cause notice dated September 11, 2021 calling upon the appellant to explain as to why the application for revocation should not be rejected on the ground that the appellant has not paid late fee for late filing of the returns for the period from 2017-2018, 2018-2019, 2019-2020, 2020-2021 and also the interest liability for late filing of the returns. The appellant had been ordered to file reply within 7 days. 

The appellant submitted the reply as well as additional written statement on September 12, 2021. The said reply was considered and vide order dated October 6, 2021 the application for revocation was rejected on the ground that the appellant had failed to pay the late fee and the interest thereon. The order however did not state as to why the reply given by the appellant to the show cause notice cannot be considered. 

Observations 

The Court observed that the cancellation of the registration dated February 8, 2021 had been passed by the central authorities is in violation of principles of natural justice and liable to be set aside. It was also taken into consideration that the concerned authorities had not specified as to how the computation of late fee and interest as done by the appellant while filing the returns for a relevant period is incorrect.

"If, according to the state authorities, the late fee remitted by the appellant falls short of any amount as per the Department computation then the appellant is entitled to know for which a show cause notice should have been issued", the Court underscored further. 

Thus, it was held that the orders of cancellation of the registration made by the state authorities as well as central authorities are unsustainable and the order rejecting the application for revocation dated October 6, 2021 is also not tenable.

Accordingly, the concerned authorities were directed to restore the appellant's certificate of registration within 7 days. Liberty was however granted to the authorities to issue show cause notice to the appellant. The appellant was also allowed to submit a reply and thereafter a a speaking order was ordered to be passed in accordance with law.

Advocates Rita Mukherjee, Himangshu Kr. Ray and Y. Sundariya appeared for the appellant. The Union of India was represented by advocates A. Ray, S. Mukherjee and Debasish Ghosh. Advocate K. K. Maiti represented respondents 2 and 3. 

Case Title: Latika Ghosh v. The Commercial Tax Officer/Assistant Commissioner, West Bengal Goods & Service Tax, Raiganj Charge & ors.

Case Citation: 2022 LiveLaw (Cal) 68

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