Patna High Court Sets Aside GST Registration Cancellation: Natural Justice Violated, Personal Hearing Mandatory Under Section 75(4) CGST Act
Overview of the Case
The Patna High Court recently adjudicated a significant writ petition filed by a contractor whose GST registration had been cancelled and whose subsequent attempts at revocation were also denied — all without being afforded a proper personal hearing. The Court's ruling reaffirms the indispensability of natural justice principles in GST proceedings and clarifies that procedural safeguards cannot be bypassed merely because a show cause notice was technically served.
Background and Facts
Identity and Nature of the Petitioner's Business
The petitioner, Munna Chaudhary, was engaged as a contractor undertaking business activities with various government organisations. As a registered person under the GST regime, he was obligated to file periodic returns under the applicable provisions.
Show Cause Notice for Non-Filing of Returns
The Respondent No. 5 issued a show cause notice dated 03.02.2023 alleging that the petitioner had failed to file GST returns for a continuous period of six months — a ground that triggers cancellation proceedings under the GST law.
The petitioner's failure to respond to the notice was not born out of negligence. He explained that:
- His accountant had contracted dengue during the relevant period and was unable to manage compliance-related work
- The petitioner himself was in a deeply disturbed state of mind as his son had been murdered during this period
Despite a written communication (Annexure P/3) addressed to the Jurisdictional Superintendent explaining these extraordinary personal circumstances, the authorities proceeded without acknowledging the explanation.
Cancellation Order Dated 26.06.2023
In the absence of a reply to the show cause notice, the registration of the petitioner was cancelled vide order dated 26.06.2023 (Annexure P/2). Crucially, no separate notice offering a personal hearing was ever issued before passing this order.
Revocation Application and Its Rejection
Filing of Pending Returns and Payment of Late Fees
The petitioner took corrective action and filed all the pending returns on 14.07.2023, along with the applicable late fees, well before any subsequent proceedings were initiated against him.
On 20.07.2023, he filed an application for revocation of the cancellation order.
Second Show Cause Notice Dated 22.01.2024
The respondent authority issued another show cause notice dated 22.01.2024 (Annexure P/4) in connection with the revocation application, demanding details of:
- Taxes paid
- Interest and penalty paid
- Late fees paid for delayed filing of GSTR-1 and GSTR-3B returns up to the effective date of cancellation
Critical Observations Regarding Annexure P/4
Upon scrutiny, the show cause notice at Annexure P/4 suffered from two grave procedural infirmities:
- The name and designation of the issuing authority were absent from the notice — the petitioner raised this issue in the writ petition, and the respondents furnished no answer to it.
- No Document Identification Number (DIN) was present on the notice, which was mandatory at the relevant point in time.
Further, the issuance of this notice itself demonstrated a lack of application of mind — the returns had already been uploaded on the GST portal on 14.07.2023, a fact that was verifiable by the authorities themselves. Yet, the notice issued on 22.01.2024 proceeded as though the returns were still outstanding.