Facts of the Case

S.K. Enterprises, a partnership firm, filed a writ petition before the High Court of Judicature at Patna challenging the order dated 5th February 2019 passed by the Joint Commissioner of State Tax, Sitamarhi, cancelling its GST registration under Section 29 of the Bihar Goods and Services Tax Act, 2017 (Reference No. ZA1002190055260), and the appellate order dated 23.02.2022 (Reference No. ZD100222009299W) passed by the Additional Commissioner of State Tax, Tirhut Division (Appeal), Muzaffarpur, dismissing the appeal solely on the ground of delay in filing. The petitioner had been regularly filing returns since 2017 through its engaged tax consultant, but information about certain returns not being uploaded surfaced only in 2019.

Issues Involved

  1. Whether the cancellation order dated 05.02.2019 was liable to be quashed for being non-speaking and violative of natural justice.
  2. Whether the delay in filing the statutory appeal, attributable to the petitioner's tax consultant and compounded by the Covid-19 pandemic, ought to have been condoned.

Petitioner's Arguments

  • The cancellation order did not refer to the contents of the show-cause notice or the petitioner's response, was non-speaking and cryptic, with the reason for cancellation not decipherable from the order.
  • The petitioner had been regularly filing returns and depositing dues since 2017 through its tax consultant; the lapse causing default surfaced only in 2019 for reasons beyond the petitioner's control, compounded by the onset of the Covid-19 pandemic.
  • The competent authority ought to have condoned the delay in filing returns/the appeal in these peculiar facts.

Respondent's Arguments

  • Learned Standing Counsel for the State did not dispute the facts and, on the specific issue of delay in filing the returns, agreed the matter would remain closed and not be raised again.

Court Order / Findings

  • The Court held that since cancellation of registration entails both civil and penal consequences, the authority ought to have at least referred to the contents of the show-cause notice and the response thereto — which was not done; the order was non-speaking and cryptic, and principles of natural justice stood violated.
  • In the peculiar facts, including the Covid-19 disruption, the authority ought to have condoned the delay in accepting the return, which prevented cancellation of registration.
  • The order dated 05.02.2019 and the appellate order dated 23.02.2022 in Form GST APL-02 were quashed, with the petitioner's registration restored, and a direction issued to the Principal Secretary-cum-Commissioner, State Taxes, Bihar, to finalise the petitioner's assessment and/or pass appropriate orders in accordance with law.
  • The issue of delay in filing the returns was directed to remain closed and not raised again, as undertaken by the Standing Counsel for the respondents.

Important Clarification

  • A GST registration cancellation order that is non-speaking and fails to disclose reasons decipherable from the record, particularly when it entails civil and penal consequences, violates natural justice and is liable to be quashed; delay in filing returns or an appeal attributable to bona fide reasons — including lapses by an engaged tax consultant and Covid-19 disruption — warrants condonation rather than dismissal.

Sections Involved

  • Section 29 of the Bihar Goods and Services Tax Act, 2017 — cancellation of GST registration.
  • Form GST APL-02 under the CGST Rules, 2017 — appellate order format.

Decision – In Favour of

In favour of the Assessee — the cancellation and appellate orders were quashed, registration restored, and the department directed to finalise the assessment.

Related Case Laws

  • M/s Ajay Kumar Singh vs State of Bihar, Civil Writ Jurisdiction Case No. 3878 of 2022, Patna High Court — a companion ruling quashing an ex parte, non-speaking GST demand order for violation of natural justice.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 3774 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 09.03.2022

Link to Download the Order

You can view/download the order here.

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