Facts of the Case

The petitioner, Busy Mechanics Private Limited, Patna, had its GST registration cancelled by order dated 28.07.2021 (Annexure-2), passed in Form GST REG-19. The petitioner approached the Patna High Court contending that the order was non-speaking, disclosing no reasons for the cancellation and not even referring to the subject matter of the underlying notice.

Issues Involved

  1. Whether a GST registration cancellation order in Form GST REG-19 that records no reasons for the cancellation can be sustained.
  2. Whether the petitioner could in any event avail the amnesty window under CBIC Notification No.3 of 2023 for seeking revocation.

Petitioner's Arguments

  • The petitioner argued that the cancellation order was a non-speaking order, disclosing no reasons whatsoever and not even referencing the subject of the show cause notice, in violation of natural justice.

Respondent's Arguments

  • The State's counsel submitted that the prescribed Form GST REG-19 had been adopted by the Assessing Officer for passing the cancellation order.

Court Order / Findings

  • The Court examined Form GST REG-19 under the Bihar GST Rules, 2017, and noted it contains a specific column requiring reasons to be assigned, but that the Assessing Officer appeared to labour under the mistaken belief that no reasons need be assigned where the assessee does not appear or file an objection.
  • The Court held that an order recording absolutely no reason for cancellation of registration cannot be countenanced, following its own Division Bench ruling in Manoj Kumar Sah v. State of Bihar (C.W.J.C. No.18307 of 2022), which held that such an order — being non-speaking, cryptic, and with the reason for cancellation not decipherable — violates principles of natural justice given its penal and pecuniary consequences.
  • The impugned cancellation order was set aside and the issue remanded for reconsideration.
  • The Court additionally noted Notification No.3 of 2023, issued by the Central Government on GST Council recommendation, allowing registered persons whose registration was cancelled for failure to file returns under Section 29(2)(b)/(c) a further window up to 30.06.2023 to apply for revocation, subject to filing returns up to the effective cancellation date and payment of tax, interest, penalty and late fee.
  • The writ petition was allowed.

Important Clarification

  • A GST registration cancellation order in Form GST REG-19 must record actual reasons for the cancellation; an order that is silent on reasons — treating non-appearance or non-filing of an objection as itself sufficient — is non-speaking and cannot be sustained given its civil and penal consequences.
  • Separately, CBIC Notification No.3 of 2023 gave taxpayers whose registration was cancelled for return-filing default (Section 29(2)(b)/(c)) a window till 30.06.2023 to seek revocation on clearing dues — a remedy available independent of any writ challenge to the cancellation order itself.

Sections Involved

  • Section 29(2)(b)/(c), Central Goods and Services Tax Act, 2017 – cancellation of registration for continuous default in filing returns.
  • Section 30, Central Goods and Services Tax Act, 2017 – revocation of cancellation, the subject of the amnesty Notification No.3 of 2023.

Decision – In Favour of

The decision is in favour of the Assessee — the non-speaking cancellation order was set aside and the matter remanded for a reasoned decision, with the amnesty notification noted as an additional avenue.

Case Details

Court: High Court of Judicature at Patna
Case No.: CWJC No.3527 of 2023
Coram: Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad
Date of Order: 25.04.2023

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