GST Registration Cancellation Quashed for Violation of Natural Justice – Authorities were directed to issue detailed SCN

Case Details

• Case Name: M/s. Sanjay Trading Company & Anr. vs. Union of India & Ors.

• Court: High Court of Gujarat at Ahmedabad

• Petition No.: R/Special Civil Application No. 18947 of 2023

• Date of Judgment: 20/09/2024

• Category of Dispute: GST Registration Cancellation

• Relevant Sections: Section 107 and Section 108 of the CGST Act, 2017

• Neutral Citation: 2024:GUJHC:51604-DB

Facts of the Case

1. The petitioners challenged the cancellation of GST registration by the Assessing Officer on grounds of lack of opportunity of hearing and absence of reasons in the cancellation order (Para 2–3).

2. The Appellate Authority dismissed the petitioners’ appeal solely on limitation without considering merits (Para 2, 6).

3. Petitioners relied upon Aggrawal Dyeing & Printing vs. State of Gujarat (2022) 137 Taxmann.com 332, where the Court had directed authorities to issue detailed show cause notices and provide hearing before cancellation (Para 4–5).

Question(s) in Consideration

• Whether the cancellation of registration without assigning reasons and without giving an opportunity of hearing violates principles of natural justice? (Para 3, 5).

• Whether dismissal of appeal on limitation grounds bars revisional powers under Section 108? (Para 7).

Observations of the Court

1. Despite earlier directions in Aggrawal Dyeing & Printing, the authorities continued to issue cryptic notices and orders (Para 5).

2. Orders of cancellation were passed without providing reasons or opportunity of hearing, contrary to natural justice (Para 6).

3. Since appeals were dismissed, revisional powers under Section 108 could not be exercised, requiring judicial intervention (Para 7).

Judgment of the Court

1. Orders of cancellation of registration and Appellate Authority orders were quashed and set aside (Para 7–8).

2. The matter was remanded to the Assessing Officer at the show cause notice stage (Para 7–8).

3. Registration shall remain suspended until disposal of fresh proceedings (Para 7–8).

4. The Court directed:

   • AO to provide detailed reasons within 2 weeks (Para 7(i)).

   • Petitioners to file reply within 2 weeks of receiving reasons (Para 7(iii)).

   • AO to provide personal hearing and pass a speaking order within 4 weeks (Para 7(iv)).

5. Court clarified that it had not gone into merits of the matter (Para 9).

Between Fine Lines (Simple Summary)

• GST registration was cancelled without reasons or hearing.

• Appeals were dismissed as time-barred, leaving no remedy.

• High Court found violation of natural justice.

• Cancellation order quashed, case sent back to AO for fresh hearing.

• Registration remains suspended until final disposal.

Summary of Referred Cases

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