Facts of the Case

The petitioners, Mahendra Pd. Singh and Bros (a partnership firm) and its partner Rakesh Kumar Sinha, challenged the cancellation of GST registration by order dated 23.02.2021. An appeal against the cancellation was filed but rejected as delayed. With no GST Appellate Tribunal constituted for the State of Bihar, the petitioners had no further statutory remedy and approached the High Court directly. On examining the cancellation order (Annexure P/1), issued in Form GST REG-19, the Court found that it contained no reasons whatsoever for the cancellation, and did not even refer to the subject matter of the underlying show cause notice.

Issues Involved

  1. Whether a GST registration cancellation order passed in Form GST REG-19, without recording any reasons and without referring to the show cause notice, can be sustained.
  2. Whether the assessing officer's apparent belief that no reasons need be assigned when an assessee does not appear or file objections is legally correct.

Petitioner's Arguments

  • The petitioners argued that the cancellation order was a non-speaking order, containing no reasons for cancellation, in violation of Form GST REG-19's own requirement of a specific column for recording reasons, and relied on the Division Bench's ruling in Manoj Kumar Sah v. State of Bihar (CWJC No.18307 of 2022) on an identical point.

Respondent's Arguments

  • The State's counsel submitted that the assessing officer had adopted Form GST REG-19 as prescribed, without specifically disputing the absence of reasons in the order under challenge.

Court Order / Findings

  • The Court held that Form GST REG-19 under the Bihar GST Rules has a specific column requiring reasons to be assigned for cancellation, and that the assessing officer's apparent belief that no reasons need be recorded where the assessee does not appear or file objections cannot be countenanced, especially given that cancellation entails both civil and penal consequences.
  • Following its Division Bench ruling in Manoj Kumar Sah v. State of Bihar, the Court reiterated that an order that is non-speaking and cryptic, from which the reason for cancellation is not decipherable, violates principles of natural justice and is liable to be quashed.
  • The impugned cancellation order dated 23.02.2021 was set aside and the issue remanded for reconsideration.
  • The Court also noted Notification No.3 of 2023, which extended a further window (up to 30.06.2023) for registered persons whose registration was cancelled for failure to file returns to apply for revocation, subject to filing pending returns and paying tax, interest, penalty and late fee.

Important Clarification

A GST registration cancellation order that fails to record any reasons, or does not even refer to the underlying show cause notice, is a non-speaking and cryptic order that violates principles of natural justice and is liable to be quashed — irrespective of whether the assessee appeared or filed objections to the notice — because cancellation carries serious civil and penal consequences for the assessee.

Sections Involved

  • Section 29(2), Bihar GST Act, 2017 — governs cancellation of GST registration, including on grounds of continuous default in filing returns.
  • Form GST REG-19, Bihar GST Rules, 2017 — the prescribed cancellation order format, which includes a mandatory column for recording reasons.
  • Notification No.3 of 2023 — provided an extended window (till 30.06.2023) for revocation applications where cancellation arose from non-filing of returns.

Decision – In Favour of

The decision is in favour of the Assessee. The non-speaking cancellation order was quashed and the matter remanded for fresh consideration.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No.3566 of 2023
Coram: Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad
Date of Order: 12.05.2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.