Gujarat HC: GST Registration Cancellation Order without Determining Tax Payable Is Invalid

Gujarat High Court (HC) ruled that the order to cancel Goods and Services Tax (GST) registration without determining the tax payable is invalid.

The petitioner (M/s Devi Products) challenged the legality and validity of the order dated 24th March 2021 passed by the department. The department issued the order stating that the registration under the Central GST and Gujarat GST has been cancelled w.e.f. 1st July 2017.

The petitioner is the sole proprietor engaged in trading brass articles. He was registered with the Gujarat VAT Act and Central Sales Tax Act 1956. Also, he got the registration under the GST Act and registration certificate with effect from 01st July 2017.

Also, the petitioner mentioned that he had filed his GST returns till June 2020. However, due to COVID-19, he had no business after June 2020, and therefore he believed there was no requirement to file the returns.

The department stated that the GST Act allows the proper officer to cancel the registration. It also argued that no further dilation in the notice is required when no return is filed for six months. 

The court observed that the requirement of filing the return and the consequences of the same are apparent in the statutory provision. However, while cancelling the registration, the department has not even determined the tax payable.

Hence, the court allowed the writ application quashing the show cause notice and the consequential order cancelling registration. Also, it directed the department to issue a fresh notice with particular reasons and a reasonable opportunity of hearing to the petitioner and then to pass an appropriate speaking order.

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