Neo Built VS ETO-cum-Proper Officer

In the case under consideration, the petitioner, who is registered as an assessee under the GST Act of 2017, has approached the court seeking a writ of certiorari. The purpose of this writ is to challenge two actions taken by the respondents: firstly, the cancellation of the petitioner’s GST registration through an order dated 15th May 2019 (referred to as Annexure P-4); and secondly, the rejection of his appeal against the aforementioned cancellation order through an action dated 9th April 2022 (referred to as Annexure P-5), which was dismissed without being entertained.

The petitioner, as per his submission, had been operating as a Contractor under M/s. Indian Oil Corporation Ltd., Panipat, for over 20 years and had transitioned to GST with GSTIN 06AEDPB7042Q1ZE. However, due to health issues, he ceased business activities from April 2018 to April 2020.

The cancellation of his registration was initiated based on a show cause notice dated 1st May 2019 (Annexure P-3), citing the reason of ‘Discontinuation/Closure of business’. The petitioner was given seven working days to respond to this notice and was also summoned for a personal hearing scheduled on 8th May 2019.

The crux of the petitioner’s argument revolves around the procedural fairness of the cancellation and subsequent appeal rejection. He contends that his temporary cessation of business due to health reasons should not have led to the cancellation of his GST registration, especially considering his long-standing business history and intention to resume operations.

The petitioner alleges that the cancellation order and the rejection of his appeal were arbitrary and violated principles of natural justice. He asserts that he was not given adequate opportunity to present his case or provide evidence of his intention to restart business activities after his recovery.

In seeking the writ of certiorari, the petitioner aims to have the court review and quash both the cancellation order dated 15th May 2019 and the rejection of his appeal dated 9th April 2022. He seeks relief on the grounds that the actions of the respondents were unjustified, disproportionate, and in violation of his rights under the GST Act and principles of procedural fairness.

The case thus hinges on whether the court will find merit in the petitioner’s arguments regarding procedural irregularities and the justification for cancellation of GST registration based on temporary cessation of business due to health reasons.

Continuing from the previous context, it is admitted by the petitioner that he did not respond to the show cause notice issued on 1st May 2019, which resulted in the issuance of an order dated 15th May 2019 canceling his GST registration. The grounds cited for cancellation were the discontinuation or closure of business activities during the period of his ill health.

The petitioner contends that he resumed his regular business operations from June 2020 onwards and subsequently filed an appeal against the cancellation order (Annexure P-4) on 22nd December 2021. The appeal process concluded with the rejection of his appeal on 9th April 2022 (Annexure P-5).

The acknowledgment for the submission of the appeal in form GST APL-02, which is crucial in this matter, details the procedural steps taken by the petitioner to challenge the cancellation of his GST registration. This form typically serves as evidence of the initiation of an appeal process under the GST Act, highlighting the petitioner’s attempt to contest the cancellation decision made earlier.

The petitioner’s argument centers on the fact that despite his temporary hiatus due to health reasons, he had always intended to resume his business activities, which he did in June 2020. He asserts that the cancellation of his GST registration was premature and unjustified, especially given his long-standing history as a contractor and his eventual return to business operations.

The rejection of his appeal without proper consideration, as alleged by the petitioner, raises concerns regarding procedural fairness and the application of principles of natural justice. The petitioner maintains that he was not afforded a reasonable opportunity to present his case and demonstrate his commitment to continue operating under GST regulations.

In essence, the case presents a challenge to the cancellation of GST registration on grounds of business discontinuation during a period of illness, followed by the rejection of an appeal contesting this cancellation. The petitioner seeks judicial intervention to review and potentially overturn both the cancellation order and the subsequent dismissal of his appeal, arguing that his rights under the GST Act were violated due to procedural irregularities and inadequate opportunity to be heard.

During the hearing of the case, the counsel representing the petitioner narrowed down their request to a specific relief: they urged the court to direct the respondents to entertain the appeal that had been filed by the petitioner. This appeal had been submitted as a challenge to the cancellation of the petitioner’s GST registration, which had been imposed due to his temporary cessation of business during a period of ill health.

The counsel’s argument focused on the procedural aspect of the case, emphasizing that the petitioner’s primary concern was not necessarily the quashing of the cancellation order itself but rather the opportunity for his appeal to be properly considered and evaluated. By citing a precedent set by a previous judgment of the court in CWP-19029, the counsel sought to establish a basis for their argument that appeals in such matters should be entertained fairly and in accordance with principles of natural justice.

The petitioner’s counsel contended that the rejection of the appeal without due consideration was unjust and that the petitioner should have been given a chance to present his case in full, particularly concerning his resumption of business activities from June 2020 onwards. This stance underscores the petitioner’s assertion that he was ready and able to continue complying with GST regulations and should not have faced cancellation of registration based solely on a temporary interruption due to health reasons.

In essence, the petitioner’s case centers on procedural fairness and the right to appeal administrative decisions under the GST Act. By requesting the court to direct the respondents to entertain the appeal, the petitioner aims to rectify what they perceive as an unjust dismissal of their right to challenge the cancellation of their GST registration through proper legal channels.

In the ongoing legal matter, the petitioner’s case took a turn towards highlighting the complexities and challenges faced by taxpayers under the GST Act, particularly regarding the cancellation and revocation procedures of GST registration. The petitioner’s counsel pointed out that the GST regime is relatively new, and taxpayers often struggle to navigate its procedures, which led the government to introduce various Amnesty Schemes. These schemes aimed to provide relief by waiving penalties or late fees and extending time limits for filing applications, recognizing the initial difficulties faced by taxpayers in complying with GST regulations.

The argument further delved into specific legal provisions and notifications issued in this context. The first crucial notification discussed was issued on 23rd April 2019 (Annexure P-6), known as the Central Goods and Services Tax (Fifth Removal of Difficulties) Order 2019. This notification acknowledged that many GST registrations had been cancelled by tax authorities under Section 29(2) of the CGST Act due to non-compliance notices served under clauses (c) and (d) of Section 169(1), despite the registered persons fulfilling requirements for revocation within the stipulated thirty-day period under Section 30(1) of the CGST Act.

The notification highlighted a key issue: under the GST Act, taxpayers were unfamiliar with the new procedures for serving notices electronically or making them available on portals. This was in contrast to the previous regime where notices were manually served. In response to these challenges, the government recognized the difficulties faced and, through the aforementioned order dated 23rd April 2019, introduced an amendment. This amendment inserted a proviso to Section 30 of the CGST Act, which provided relief to registered persons who, due to the unfamiliarity with the new notice service methods, failed to reply to cancellation notices. This failure resulted in the cancellation of their GST registration, thereby preventing them from filing applications for revocation as per the statutory requirements.

The petitioner’s counsel used this background to argue that the petitioner’s case falls within the ambit of these amendments and notifications. They contended that the petitioner, having faced cancellation of registration under similar circumstances—specifically, due to non-response to notices served electronically—should be entitled to the benefit of these Amnesty Schemes and procedural amendments. The counsel emphasized that these provisions were introduced precisely to address such situations where genuine hardships arise from procedural complexities under the GST Act.

In conclusion, the petitioner’s case hinges on the application of these Amnesty Schemes and procedural amendments to rectify what they perceive as an unjust cancellation of their GST registration due to procedural hurdles and unfamiliarity with new GST compliance requirements. They seek the court’s intervention to ensure that these statutory reliefs are applied in their case, allowing them the opportunity to have their appeal entertained and their GST registration reinstated accordingly.

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