Facts of the Case

The petitioner, Gulneet Kaur Narula, engaged in the business of toys and baby care products, held a valid GST registration. Due to non-filing of GST returns, the GST Department issued a Show Cause Notice dated 09.02.2022 and subsequently cancelled the petitioner's GST registration by order dated 22.02.2022.

The petitioner challenged the cancellation by filing an appeal before the Appellate Authority. However, the appeal was dismissed on 07.09.2022 solely on the ground of limitation without examining the merits.

Aggrieved by the dismissal, the petitioner approached the Delhi High Court seeking restoration of the appeal.

 

Issues Involved

  1. Whether dismissal of the appeal solely on the ground of limitation was justified.
  2. Whether cancellation of GST registration without providing an effective opportunity of hearing violated principles of natural justice.
  3. Whether the Appellate Authority should decide the appeal on merits considering the peculiar facts of the case.

 

Petitioner's Arguments

  • The Show Cause Notice did not specify that any personal hearing would be granted before cancellation of registration.
  • GST registration was cancelled without affording an effective opportunity of hearing.
  • Due to cancellation of GST registration, the petitioner was unable to discharge further GST liabilities arising from business activities.
  • The delay in filing the appeal occurred due to the Covid-19 pandemic and other unavoidable circumstances.
  • The petitioner requested restoration of the appeal so that the dispute could be decided on merits instead of being rejected on technical grounds.

 

Respondents' Arguments

  • The Revenue submitted that the Appellate Authority had dismissed the appeal only on the ground of limitation.
  • The Department fairly admitted before the High Court that the appeal had not been contested on merits before the Appellate Authority.

 

Court Findings / Order

The Delhi High Court observed that:

  • The petitioner sought restoration primarily to regularise GST compliance and payment of taxes.
  • Considering the peculiar facts and circumstances, including the Covid-related delay, the matter deserved consideration on merits.
  • Since the appeal had been dismissed only on limitation and not on merits, the ends of justice required restoration of the appeal.

Accordingly, the Court:

  • Set aside the Appellate Authority's order dated 07.09.2022.
  • Directed the Appellate Authority to consider the petitioner's appeal on merits in accordance with law.
  • Disposed of the writ petition with the above directions.

 

Important Clarification

  • GST registration cancellation affecting business operations should ordinarily be examined on merits where exceptional circumstances exist.
  • Courts may exercise writ jurisdiction where appeals are dismissed solely on limitation despite genuine reasons.
  • Opportunity of hearing remains an important component of cancellation proceedings under the GST law.
  • Technical dismissal of an appeal should not defeat substantial justice where sufficient cause is shown.
  • Restoration of the appeal does not amount to setting aside the cancellation itself; it only enables adjudication on merits.

Relevant Sections Involved

  • Section 29 of the Central Goods and Services Tax Act, 2017 – Cancellation of Registration
  • Section 107 of the Central Goods and Services Tax Act, 2017 – Appeals to Appellate Authority
  • Principles of Natural Justice (Opportunity of Hearing)

 

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782890606_160compressed.pdf

 

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