Facts of the Case

Petitioner Skva Rubber Solution (P.) Ltd., a private company engaged in trading crumb rubber granulate in Maharashtra, faced cancellation of its GST registration for the period April 2019 to March 2020 due to non-filing of returns.

  • Financial difficulties in FY 2018-19 caused delayed return filings and temporary suspension of Mumbai operations.
  • The authorities issued a SCN under REG-17 and cancelled registration effective 1 May 2019 without granting a personal hearing.
  • Pending returns were subsequently filed under amnesty, and revocation under REG-21 was requested citing sufficient cash balance.
  • The SCN proposed rejection, and the revocation request was dismissed.
  • The petitioner’s appeal was dismissed solely on procedural grounds (limitation), without considering the merits.

Issues Involved

  1. Whether cancellation of GST registration without a personal hearing and via non-speaking orders violates the principle of natural justice.
  2. Whether an appellate authority can dismiss a revocation request on procedural grounds, ignoring serious civil consequences.
  3. Validity of SCNs and cancellation orders issued in the absence of reasoned consideration of petitioner’s submissions.

Petitioner’s Arguments

  • Cancellation orders were arbitrary and non-speaking, disregarding the submissions regarding financial difficulties.
  • The petitioner argued denial of personal hearing and non-consideration of cash balance and pending returns constituted a breach of natural justice.
  • Appeal dismissal solely on limitation was unduly pedantic, ignoring civil consequences of registration cancellation.

Respondent’s Arguments

  • The Department relied on procedural lapses in filing returns.
  • Contended that limitation barred the appeal, and statutory provisions allowed cancellation under the CGST/MGST framework.
  • Justified cancellation without detailed reasoning or hearing as per administrative discretion.

Court Order / Findings

  • The Bombay High Court held that:
    • SCNs and cancellation orders were non-speaking and arbitrary, ignoring petitioner’s submissions.
    • Cancellation violated natural justice; hence, it was void ab initio and non est.
    • Appellate authority erred by dismissing the revocation request on procedural grounds despite serious civil consequences.
    • All SCNs and cancellation orders quashed, with liberty for authorities to proceed anew after a personal hearing and issuance of speaking orders.

Important Clarifications

  • Mere procedural lapses cannot override natural justice obligations.
  • Authorities must issue speaking orders and consider submissions before cancellation.
  • Petitioner allowed to revive registration by complying with statutory procedures.
  • Emphasizes HC’s stance aligning with earlier case law on natural justice in GST cancellations.

Sections / Rules Involved:

  • Section 29 & 30, CGST Act, 2017 / MGST Act, 2017
  • Rule 22 & 23, CGST Rules, 2017 / MGST Rules, 2017

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.