Gauhati High Court Sets Aside GST Cancellation Order for Want of Reasons: Rakhe Achi Vs Union of India
Introduction
In a significant ruling, the Gauhati High Court has struck down an order cancelling GST registration on the ground that it failed to record any reasons for the decision. The case, Rakhe Achi Vs Union of India, was brought before the Court under Article 226 of the Constitution of India, challenging a cancellation order dated 27.05.2023 passed under the Central Goods and Services Tax (CGST) Act, 2017.
The assessee contended that the cancellation was carried out mechanically, without proper application of mind by the Proper Officer, and that the order suffered from a fundamental procedural defect.
Facts Leading to the Dispute
The assessee, belonging to the Scheduled Tribe community, ran a proprietorship business dealing in stationery items, book stalls, and government supply contracts. His GST registration had been granted with effect from 27.12.2019.
On 16.01.2023, the Proper Officer issued a show cause notice alleging that the assessee had not filed returns under Section 39 of the CGST Act for six consecutive months. The notice:
- Gave the assessee thirty working days to respond
- Fixed a personal hearing date
- Suspended the registration immediately, effective 16.01.2023
Despite this, no reply was filed, and on 27.05.2023, the registration was cancelled with retrospective effect from 15.01.2023.
Case Presented by the Assessee
The assessee's counsel argued that: