Facts of the Case

The petitioners, Scorp Industries & Another, challenged the rejection of their application for revocation of cancellation of GST registration before the Calcutta High Court. The GST registration had been cancelled pursuant to a show cause notice dated 13 September 2024, to which the petitioners had not submitted any reply. Thereafter, the petitioners filed an application for revocation of cancellation under the statutory provisions on 21 October 2024. A subsequent show cause notice was issued regarding the proposed rejection of the revocation application, but the petitioners again failed to submit a response, resulting in rejection of the revocation application by order dated 21 February 2025. The petitioners approached the High Court challenging the rejection order.

Issues Involved

  1. Whether rejection of the application for revocation of cancellation of GST registration was legally sustainable when the field visit report relied upon by the department had not been supplied to the taxpayer.
  2. Whether principles of natural justice required the proper officer to provide the field visit report and an effective opportunity of hearing before deciding the revocation application.
  3. Whether the rejection order deserved to be set aside for fresh consideration.

Petitioner’s Arguments

  • The petitioners submitted that although they had failed to respond to the show cause notice relating to revocation, the non-compliance occurred because their consultant was unavailable during the relevant period.
  • It was further argued that the department had relied upon a field visit report while cancelling the GST registration.
  • However, the said field visit report was never furnished to the petitioners.
  • Since the report formed the basis of the adverse action, denial of access to the report deprived the petitioners of an effective opportunity to defend their case.
  • Therefore, the rejection of the revocation application violated the principles of natural justice and deserved to be set aside.

Respondent’s Arguments

  • The State disputed the contention that the field visit report had not been supplied.
  • It was submitted that the petitioners had repeatedly failed to respond to the statutory show cause notices despite sufficient opportunities.
  • Accordingly, the proper officer rightly rejected the revocation application due to the petitioners' failure to furnish any reply.

Court Order / Findings

The Calcutta High Court observed that:

  • Although the GST authorities possess statutory power to cancel registration under Section 29, the law simultaneously grants a registered taxpayer the statutory right to seek revocation under Section 30.
  • The petitioners had admittedly exercised this statutory remedy by filing the revocation application.
  • Since the department had relied upon a field visit report, fairness required that such report be supplied to the petitioners before any adverse decision was taken.
  • The original show cause notice did not indicate that the field visit report had been furnished to the petitioners.
  • Even during consideration of the revocation application, the proper officer ought to have supplied the report and granted the petitioners an opportunity to respond.
  • Failure to do so amounted to denial of a proper opportunity of hearing.

Accordingly, the Court:

  • Set aside the order dated 21 February 2025 rejecting the revocation application.
  • Directed the Proper Officer to furnish the field visit report to the petitioners.
  • Permitted the authorities, if necessary, to conduct a fresh inspection of the petitioners' place of business.
  • Directed the Proper Officer to reconsider and decide the revocation application afresh within six weeks from communication of the Court's order.
  • Disposed of the writ petition accordingly.

Important Clarification

This judgment reiterates that:

  • Supply of every material relied upon by the GST authorities is an essential component of natural justice.
  • Where a field visit report forms the basis for cancellation or rejection of revocation, the taxpayer must be given a copy before any adverse decision is taken.
  • Authorities must provide a meaningful opportunity to explain or rebut the contents of such report.
  • Even where the taxpayer has defaulted in replying earlier, statutory rights available during revocation proceedings cannot be defeated by withholding material relied upon by the department.
  • The decision strengthens procedural fairness in GST registration cancellation and revocation proceedings.

Sections Involved

  • Section 29 – Cancellation of GST Registration
  • Section 30 – Revocation of Cancellation of GST Registratio

Link to Download the Order https://mytaxexpert.co.in/uploads/1784872168_1937compressed.pdf

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