Cancellation of GST Registration Quashed Due to Cryptic Order and Failure to Consider Previous Amendments

Issue:

Whether the cancellation of a GST registration, based on allegations of fraud, wilful misstatement, or suppression of facts, is valid if the cancellation order is cryptic, lacks assigned reasons, and fails to consider that the GST authorities had previously permitted the petitioner to amend its registered place of business multiple times.

Facts:

The petitioner’s GST registration was sought to be cancelled on the grounds that it was obtained by means of fraud, wilful misrepresentation, or suppression of facts. A show cause notice (SCN) was issued to this effect. However, subsequent to the SCN, the GST authorities themselves permitted the petitioner to amend its registered place of business on multiple occasions. The petitioner also submitted various documents to prove the genuineness of its business. Despite these circumstances, the petitioner’s registration was cancelled through a cryptic order that did not provide any reasons for the cancellation. The order also failed to acknowledge or account for the fact that the authorities had previously allowed the petitioner’s amendment applications.

Decision:

The court held that since the GST authorities had themselves allowed multiple amendment applications for the registered place of business, a detailed order was required for the cancellation. The impugned cancellation order did not reflect that the proper officer had considered their own previous orders permitting the amendments. Therefore, the court set aside the order of cancellation and remanded the matter back to the proper officer for a fresh decision after considering all relevant facts and providing proper reasons.

Key Takeaways:

Reasoned Orders: Adjudicating authorities are mandated to pass reasoned orders. A cryptic order without proper justification is legally unsustainable, especially when significant consequences like cancellation of registration are involved.
Consistency in Departmental Actions: The department’s actions must be consistent. Allowing amendments to registration details while simultaneously alleging fraud or misrepresentation without explanation in the cancellation order indicates an inconsistency that can lead to judicial intervention.
Consideration of All Relevant Facts: The adjudicating authority must take into account all relevant facts and submissions, including previous departmental actions (like approving amendments), before passing an adverse order. Failure to do so amounts to a non-application of mind.
Violation of Natural Justice (Implicit): While not explicitly stated as a violation of natural justice, a cryptic order that ignores relevant facts can be construed as a failure to provide a fair and transparent decision-making process.
Remand for Fresh Consideration: When orders are set aside due to lack of reasoning or non-consideration of crucial facts, the matter is typically remanded back to the original authority for fresh consideration and a well-reasoned decision.

HIGH COURT OF CALCUTTA

Bajrang Lal Dargarh

Union of India

Raja Basu Chowdhury, J.

WPA No. 25093 of 2024

APRIL 21, 2025

Sweta Mukherjee for the Petitioner. Kaushik Dey and Tapan Bhanjafor the Respondent.

ORDER

1. The instant writ petition has been filed, inter alia, challenging the order of cancellation of registration of the petitioner under the CGST/WBGST Act, 2017 (hereinafter referred to as the “said Act”) dated 17^th May 2024 with effect from 16^th June 2020 being the date on which the show cause notice was issued.

2. When the matter was previously taken up by order dated 3^rd April 2025, this Court was, inter alia, pleased to record as follows:-

1. “Affidavit of service filed in Court today is taken on record.

2. The instant writ petition has been filed, inter alia, challenging the order of cancellation of registration of the petitioner under the Central/West Bengal Goods and Services Tax Act, 2017 dated 17^th May, 2024 with effect from 16^th June, 2020, being the date on which the show cause notice was issued.

3. Ms. Mukherjee, learned advocate representing the petitioner by placing before this Court the show cause notice dated 16^th June, 2020 would submit that the said notice was duly responded to by the petitioner. Subsequently, on 31^st December, 2021, at the instance of the petitioner, the registration particulars were permitted to be amended whereby the petitioner’s place of business was shifted from the first floor to second floor of the same building where the petitioner was housed. Ms. Mukherjee would submit that after the portion which the petitioner was originally occupying was repaired the petitioner has been shifted back to its original location in the same building and the petitioner having applied for the amendment of the registration particulars, the same was allowed by an order dated 27^th March, 2022 and still later further amendment was allowed by an order dated 16^th July, 2022. Having regard thereto, she would submit that there was no cause for the respondents to issue the order of cancellation on 17^th May, 2024, in respect of the show cause notice dated 16^th June, 2020.

4. Mr. Bhanja, learned advocate who usually appears on behalf of the respondent CGST authorities is present in Court. I direct Mr. Bhanja, learned advocate, to take appropriate instruction in the matter. Let his appointment be regularized.

5. Let a copy of the writ petition be served on Mr. Bhanja in course of this day.

6. Since, Mr. Bhanja would pray for an accommodation, let this matter stand adjourned and appear in the daily supplementary list on 21^st April, 2025.

3. Today the learned advocate for the parties have made their submissions.

4. Heard the learned advocates appearing for the respective parties and considered the materials on record. It would prima facie transpire that after the show cause notice was issued on 16^th June, 2020, at the instance of the petitioner from time to time, the respondents have permitted the petitioner to amend the petitioner’s registered place of business. It would also transpire from paragraph 4 of the instant writ petition that the petitioner had met with the respondent no. 2 and submitted the documents in support of its proof of business. It, however, appears that the show cause notice dated 16^th June 2020 that the same has been issued on the ground that the registration has been obtained by means of fraud, willful mis-statement or suppression of facts. Unfortunately, despite the respondents from time to time allowing the amendment applications as noted above, have purported to cancel the registration of the petitioner by a cryptic order dated 17^th May 2024. No reasons whatsoever had been assigned.

5. Although, Mr. Dey learned advocate appearing for the CGST authorities has submitted that by reasons of the petitioner not filing any response, the aforesaid order has been passed and though such contention has been denied by Ms. Mukherjee, learned advocate appearing for the petitioner, without going into the correctness thereof, and having regard to the fact that the respondent no. 2 having allowed the amendment applications, a detailed order ought to have been passed. The order impugned does not reflect the fact that the proper officer had taken note of its previous orders whereby the amendment applications were allowed.

6. Having regard thereto, the order dated 17^th May 2024 cannot be sustained and the same is accordingly set aside. The matter is remanded back to the proper officer.

7. The petitioner shall be at liberty to file appropriate response both physically and electronically and for the said purpose, the proper officer is directed to restore the petitioner’s registration on the portal for the petitioner to file its response.

8. The restoration of the registration should be effected within a period of one week from the date of communication of this order. The response shall be filed within two weeks thereafter. The proper officer shall upon giving an opportunity of hearing to the petitioner, shall hear out and decide the above show cause dated 16^th June 2020 by passing a reasoned order.

9. With the above observations and directions, the writ petition is disposed of.

10. All parties shall act on the basis of the server copy of this order duly downloaded from this Court’s official website.