GST Update

 Desk of CA. Praveen Sharma – 1010 Series (CAPS) 

GAUHATI HIGH COURT IN THE CASE OF Yamang Siram

The petitioner challenged the cancellation of her GST registration on the ground that the order was passed without proper reasoning and application of mind. The registration was cancelled due to alleged non-filing of returns for a continuous period.

The petitioner submitted that she could not respond to the show cause notice as it was not effectively accessed due to login issues. She also contended that the cancellation order was not a speaking order and did not contain any reasons, which is mandatory under law.

The department argued that the petitioner had failed to file returns for a long period and did not take timely action for revocation or appeal, showing lack of diligence.

The Court observed that while non-filing of returns can be a valid ground for cancellation, the proper officer is still required to follow due process and pass a reasoned order. Cancellation of GST registration has serious civil consequences and therefore must be supported by clear reasons.

It was held that the impugned order merely mentioned “others” as the reason without any explanation, making it a non-speaking order. Such an order reflects lack of application of mind and violates principles of natural justice.

The Court further held that even if the taxpayer fails to reply or appear, the authority cannot pass a mechanical order without assigning reasons. Recording of reasons is an essential requirement under the law and acts as a safeguard against arbitrary action.

Final outcome: The cancellation order was set aside and the matter was restored to the stage of show cause notice. The petitioner was given an opportunity to either file a reply or clear pending returns with dues. The officer was directed to pass a fresh order after following due process.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS