Facts of the Case

The petitioners, M/s. Gammon-Sew Joint Venture and M/s. Helios Fitness Services Pvt. Ltd., challenged the cancellation of their GST registrations before the Telangana High Court. Their GST registrations had been cancelled by the jurisdictional Superintendent of Central Tax, and the appellate authority subsequently rejected their statutory appeals, thereby affirming the cancellation orders.

Aggrieved by the appellate orders, the petitioners approached the High Court under Article 226 of the Constitution of India seeking quashing of both the cancellation orders and the appellate orders on the ground that they were arbitrary, illegal and violative of the principles of natural justice.

Issues Involved

  1. Whether the cancellation of the petitioners' GST registrations was legally sustainable.
  2. Whether the appellate authority was justified in affirming the cancellation orders.
  3. Whether the petitioners were denied adequate opportunity of hearing before cancellation of their GST registrations.
  4. Whether the matter deserved reconsideration by the proper officer in accordance with law.

Petitioners' Arguments

  • The petitioners contended that the GST registration cancellation orders were arbitrary and contrary to law.
  • It was argued that the appellate authority failed to properly examine the facts and mechanically upheld the cancellation orders.
  • The petitioners submitted that adequate opportunity of hearing had not been granted before passing the cancellation orders.
  • They prayed that both the original cancellation orders as well as the appellate orders be set aside and appropriate relief be granted.

Respondents' Arguments

  • The tax authorities defended the cancellation orders as well as the appellate orders.
  • It was submitted that the appellate authority had rightly confirmed the cancellation of GST registration.
  • The respondents opposed interference by the High Court and supported the legality of the departmental action.

Court Order / Findings

The Telangana High Court observed that the controversy involved in the present writ petitions was already covered by its decision rendered in W.P. No. 34926 of 2022 on the very same day.

Following the earlier decision, the Court:

  • Set aside the GST registration cancellation orders.
  • Quashed the appellate authority's orders affirming the cancellation.
  • Remanded the matters to the jurisdictional Superintendent of Central Tax for fresh adjudication.
  • Directed the proper officer to pass fresh orders strictly in accordance with law after granting due opportunity of hearing to the petitioners.
  • Directed that the entire exercise should be completed within two months from receipt of the High Court's order.
  • Directed the petitioners, in the meantime, to file pending GST returns and make the applicable statutory payments.

Accordingly, both writ petitions were allowed without any order as to costs.

Important Clarification

This judgment reiterates that cancellation of GST registration cannot be sustained where the requirements of fair procedure and principles of natural justice have not been adequately followed. Even where an appellate authority has confirmed the cancellation, the High Court may intervene if procedural fairness has been compromised. The Court emphasized that fresh adjudication should be undertaken only after providing the taxpayer with an effective opportunity of hearing.

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785322913_2231compressed.pdf

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