Facts of the Case

The petitioner's GST registration was cancelled by order dated 20.04.2022 passed by the second respondent, and his subsequent appeal under Section 107(1) and 107(4) of the CGST Act was dismissed on the ground of delay by an appellate order dated 14.12.2022. The petitioner admittedly neither filed a response to the show cause notice dated 29.03.2022 nor participated in any personal hearing, but the cancellation order nonetheless recorded that the opinion to cancel was formed "on examination of the petitioner's reply and the submissions made at the time of hearing." The petitioner's counsel explained the non-response was due to the proprietor being hospitalised for over a month for Left Hemiplegia/Tentorial Meningioma, followed by prolonged convalescence.

Issues Involved

  1. Whether a cancellation order that falsely records examination of a reply and hearing submissions — when none were ever filed or attended — reflects non-application of mind warranting interference, despite the appeal against it being time-barred.

Petitioner's Arguments

  • The cancellation order's recitation that it was passed upon examining the petitioner's reply and hearing submissions was factually false, since the petitioner never filed any response or attended any hearing — demonstrating complete non-application of mind and arbitrary exercise of jurisdiction.
  • The proprietor's hospitalisation for a serious neurological condition during the relevant period explained the bona fide default, and returns would be filed if an opportunity were granted.

Respondent's Arguments

  • The petitioner could not complain of lack of opportunity since service of the show cause notice dated 29.03.2022 was not disputed, and it was open to him to place his medical circumstances on record before the second respondent at that time; the department could not, however, contest that the cancellation order's own recitation was factually inconsistent with the admitted non-response.

Court Order / Findings

  • The Court examined Annexure-A and found that despite the petitioner's undisputed non-response and non-participation in the hearing, the cancellation order recorded an opinion "based on the alleged examination of the reply and the submissions made at the time of personal hearing" — an internal contradiction the department's own counsel could not explain away.
  • The Court held that this reflected a complete lack of application of mind in cancelling the registration, amounting to an arbitrary exercise of jurisdiction, and quashed the cancellation order dated 20.04.2022, conditional on the petitioner filing his pending returns within four weeks, failing which the cancellation would automatically stand revived.
  • Consequently, the appellate order dated 14.12.2022, rejecting the appeal on delay, was held not to survive for separate consideration and was disposed of accordingly.

Important Clarification

A GST registration cancellation order that recites examination of a reply or hearing submissions which were, in fact, never filed or attended by the assessee reveals a template-driven, non-speaking exercise of quasi-judicial power; such an internally contradictory order reflects non-application of mind and is liable to be quashed in writ jurisdiction, independent of whether the statutory appeal against it was time-barred.

Sections Involved

  • Section 29, CGST Act, 2017 — governs cancellation of GST registration.
  • Section 107, CGST Act, 2017 — prescribes the limitation period for filing appeals before the Appellate Authority.

Decision – In Favour of

In favour of the Assessee — the cancellation order was quashed, conditional on filing of pending returns within four weeks, with the appellate order treated as not surviving for consideration.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case Number: WP No. 480 of 2023
  • CNR / Citation: WP No. 480 of 2023 (T-RES)
  • Coram: Hon'ble Mr Justice B M Shyam Prasad
  • Date of Order: 10 March 2023

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