Facts of the Case

Raj Kumar Mondal filed an intra-court appeal, along with IA No. CAN 1 of 2022, before a Division Bench of the High Court at Calcutta against an order dated 19.01.2022 in WPA 507/2022, by which the learned Single Judge had dismissed his writ petition challenging the cancellation of his GST registration under the West Bengal Goods and Services Tax Act, 2017. A show-cause notice dated 18.11.2021 alleged that the appellant's principal place of business was not found during a field visit, and gave seven days to reply. The appellant's authorised representative was allegedly not entertained when he visited the department; the appellant nonetheless sent a reply dated 02.12.2021 by speed post. On 03.01.2022, an order of cancellation was uploaded, retrospectively cancelling the registration from 01.07.2017, referring inconsistently to both an alleged reply and to no reply having been filed, and relying on additional material — including electricity consumption data and photographs from the site visit — not disclosed in the show-cause notice. The Single Judge had dismissed the writ petition on the ground that the alternative remedy of revocation under Section 30 ought to be availed.

Issues Involved

  1. Whether the appellant could bypass the alternative remedy under Section 30 by demonstrating a total violation of principles of natural justice.
  2. Whether the cancellation order, relying on material beyond the allegations in the show-cause notice, violated natural justice.
  3. Whether retrospective cancellation of registration was permissible absent such a proposal in the show-cause notice.

Petitioner's Arguments

  • The order of cancellation was passed in total violation of principles of natural justice; it mentioned several details and information — including electricity consumption and photographs from a site visit — copies of which were never furnished to the appellant, who was never put on notice about such allegations.
  • A bunch of documents, including trade licence, FSS Act licence, bank statements and trademark registration, were produced to show the appellant was carrying on business, including at an additional place.
  • Retrospective cancellation from the date of grant of registration was arbitrary since no such proposal featured in the show-cause notice.

Respondent's Arguments

  • Since no reply to the show-cause notice was furnished (on the department's version), the authority was justified in proceeding to cancel the registration.
  • If aggrieved, the appellant could seek revocation of cancellation of registration by invoking Section 30 of the Act, and need not be relegated to the writ court.

Court Order / Findings

  • The rule of alternative remedy, while ordinarily enforced strictly in taxation statutes, admits an exception where there is a total violation of principles of natural justice.
  • The order of cancellation dated 03.01.2022 went beyond the allegation in the show-cause notice dated 18.11.2021 (absence at the principal place of business) by relying on site-visit material and electricity-consumption data never disclosed to the appellant — this amounted to a serious violation of natural justice, since the opportunity to be heard must be effective, not illusory.
  • Cancellation of registration with retrospective effect was also held bad in law, more particularly since no such proposal featured in the show-cause notice.
  • The appeal and connected application were allowed; the Single Judge's order was set aside, the cancellation order dated 03.01.2022 was quashed, and the respondents were directed to restore the certificate of registration within 48 hours, with liberty granted to the department to issue a fresh show-cause notice if required.

Important Clarification

  • Where a GST registration cancellation order relies on material or allegations — such as site-visit findings or electricity-consumption data — beyond what was disclosed in the show-cause notice, and the assessee was denied an effective opportunity to respond, the order violates natural justice, and the availability of the statutory remedy of revocation under Section 30 will not bar relief under Article 226. Retrospective cancellation is impermissible where the show-cause notice did not propose it.

Sections Involved

  • Section 29 of the West Bengal Goods and Services Tax Act, 2017 — cancellation of registration.
  • Section 30 of the West Bengal Goods and Services Tax Act, 2017 — revocation of cancellation of registration.
  • Form GST REG-19 — order of cancellation of registration.

Decision – In Favour of

In favour of the Assessee — the Division Bench allowed the appeal, set aside the Single Judge's order, quashed the cancellation, and directed restoration of registration within 48 hours.

Related Case Laws

  • Other Calcutta High Court rulings holding that GST registration cancellation orders relying on undisclosed material beyond the show-cause notice violate natural justice.

Case Details

  • Court: High Court at Calcutta (Appellate Side)
  • Case No.: MAT 80 of 2022 with IA No. CAN 1 of 2022
  • Coram: Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Hiranmay Bhattacharyya
  • Date of Order: 08.03.2022

Link to Download the Order

You can view/download the order here.

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