Facts of the Case

The appellant, a company engaged in various infrastructure projects with a pan-India presence, including projects for the Airport Authority of India, obtained GST registration on commencing business in West Bengal and was carrying on business and remitting taxes. By proceedings dated 18.11.2019, a show cause notice was issued alleging the appellant was non-functioning/non-existing at its place of business; the appellant did not respond, and its registration was cancelled the same day, 18.11.2019. The appellant thereafter filed an application dated 08.02.2022 for revocation of the cancellation, which was rejected on the very same day. The appellant challenged the cancellation before a single judge in WPA 5334 of 2021; interim relief was declined, and the respondents were directed to file an affidavit-in-opposition by 9th November, 2021, which was not complied with. This intra-court appeal, MAT 389 of 2022 with IA CAN 1 of 2022, was filed against the single judge's order.

Issues Involved

  1. Whether the rejection of the revocation application, passed the same day it was filed, violated the principles of natural justice.
  2. Whether the material relied on in the impugned order was germane to determining whether the appellant was a genuinely functioning dealer at its place of business.

Petitioner's (Appellant's) Arguments

  • The respondents had not complied with the single judge's direction to file an affidavit-in-opposition within the time stipulated.
  • The appellant is a genuine, pan-India infrastructure company that had recently commenced business in West Bengal on being granted orders by various authorities, including the Airport Authority of India, and had been carrying on business and remitting taxes.
  • The application for revocation of cancellation was rejected without any real consideration, on the very day it was filed.

Respondent's Arguments

  • The extracted order does not record any substantive counter-submissions by the respondents on the merits of the revocation application beyond the impugned orders of cancellation and rejection themselves.

Court Order/Findings

  • The Court held that the authority committed a grave error in rejecting the application for revocation of cancellation of registration.
  • It found that certain details and data referred to in the order dated 18.08.2020 passed by the Joint Commissioner of State Tax (GST Appeal) may not have been germane to deciding whether the appellant was an existing, functioning dealer.
  • Prima facie, the transactions referred to in the order showed that the appellant was carrying on business within West Bengal.
  • The Court was satisfied that the order rejecting the revocation application was in total violation of the principles of natural justice and arbitrary.
  • The appeal and the writ petition were disposed of by setting aside the order dated 08.02.2022 rejecting the revocation application; the application was restored to the file of the concerned authority, which was directed to issue notice to the appellant within two weeks and decide afresh, on merits and after a personal hearing, uninfluenced by the order dated 18.08.2020.

Important Clarification

  • A rejection of an application for revocation of GST registration cancellation, passed the same day it is filed and without a real opportunity of hearing, is liable to be set aside as arbitrary and in violation of natural justice.
  • Material relied upon in a prior appellate order that is not germane to whether the dealer is presently functioning at its declared place of business should not be treated as decisive on the question of revocation.

Sections Involved

  • Central Goods and Services Tax Act, 2017 – governs cancellation and revocation of cancellation of GST registration; the specific sections are not set out in the extracted order.
  • Article 226 of the Constitution of India – writ jurisdiction invoked in the underlying writ petition, WPA 5334 of 2021.

Decision – In Favour of

In favour of the assessee. The appeal was allowed; the order rejecting the revocation application was set aside, and the matter was remanded to the authority for a fresh decision on merits after a personal hearing, uninfluenced by the earlier order.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court at Calcutta, Civil Appellate Jurisdiction, Appellate Side
  • Case No.: MAT 389 of 2022 with IA No. CAN 1 of 2022
  • Coram: Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Hiranmay Bhattacharyya
  • Date Heard/Judgment: 22.04.2022

Link to Download the Order

Download the full judgment (PDF)

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