Facts of the Case

The petitioner, Sambhu Das, proprietor of M/s Vaishno Trading, Guwahati, challenged an order dated 27.08.2019 passed by the Commercial Tax Officer (Superintendent of Taxes), Guwahati-B, cancelling the GST registration of his firm. A show cause notice dated 27.08.2019 had been issued, to which the petitioner replied on 28.08.2019. In a subsequent statement dated 04.09.2019, the petitioner stated in writing that he had no knowledge of the business transactions of M/s Vaishno Trading and that one Sashi Chowdhury (respondent no. 5) had used his PAN card and documents to run the firm's business fraudulently, without payment of due taxes. On this basis, the registration was cancelled to prevent further evasion of revenue. An earlier interlocutory application (I.A. (Civil) No. 794/2021) vacating the interim stay had already noted that an opportunity of hearing preceded the cancellation.

Issues Involved

  1. Whether the order cancelling the petitioner's GST registration was passed without affording an opportunity of hearing.
  2. Whether disputed questions of fact regarding the circumstances of cancellation could be adjudicated in a writ petition or ought to be raised before the statutory Appellate Authority under Section 107 of the CGST Act, 2017.

Petitioner's Arguments

  • The order cancelling the registration was passed without affording the petitioner a proper opportunity of hearing.
  • The facts of the case were not considered in their proper perspective by the cancelling authority.

Respondent's Arguments

  • Section 107 of the Central Goods and Services Tax Act, 2017 provides an adequate and effective statutory remedy to challenge the cancellation order.
  • Whether the facts leading to cancellation were properly considered is a question requiring adjudication on facts, which is properly the domain of the Appellate Authority under Section 107, not the writ court.

Court Order / Findings

  • The impugned cancellation order itself recorded that a show cause notice was issued on 27.08.2019 and the petitioner had filed a reply on 28.08.2019, showing that an opportunity of hearing had, in fact, been afforded.
  • The Court held that where a party disputes the facts recorded in a cancellation order, such disputes ought to be raised before the Appellate Authority under Section 107 of the CGST Act, 2017 and not in a writ petition.
  • Finding no merit in the writ petition on the facts before it, the Court dismissed it.

Important Clarification

Where a GST registration cancellation order itself records that a show cause notice was issued and duly replied to, a writ court will treat the requirement of natural justice as satisfied on the face of the record; disputes over the correctness or completeness of the facts relied upon by the cancelling authority are questions of fact appropriately left to the statutory appeal under Section 107 of the CGST Act, 2017, not to writ jurisdiction.

Sections Involved

  • Section 107, Central Goods and Services Tax Act, 2017 – provides the statutory appellate remedy against orders passed by the proper officer, including registration cancellation orders.
  • Section 29, Central Goods and Services Tax Act, 2017 (underlying provision, though not separately quoted) – empowers cancellation of GST registration on specified grounds including fraudulent conduct.

Decision – In Favour of

The writ petition was dismissed for want of merit, without prejudice to the statutory appellate remedy – the outcome favours the Department.

Case Details

Court: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
Case No.: WP(C)/985/2020
CNR: GAHC010033372020
Coram: Hon'ble Mr. Justice Devashis Baruah
Date of Order: 02.08.2023

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