Bombay High Court Sets Aside GST Cancellation Order For Lack Of Reasons

The Bombay High Court has set aside an order cancelling the GST registration of Tex Fab India after finding that the impugned order did not contain any reasons. The Court also recorded that the attachment of the petitioner's bank account had lapsed by operation of law under Section 83(2) of the CGST Act.

A bench of Justices G. S. Kulkarni and Aarti Sathe observed that the issue was no longer res integra and that recording reasons while cancelling GST registration is a settled legal requirement.

The Court held:

“Inasmuch as the impugned Order does not set out any reasons for cancelling the GST registration of the Petitioner, we find that the issue is no longer res integra. The requirement of recording reasons while passing such orders is now well settled.”

Since the cancellation order failed to disclose any reasons, the Court held that it could not be sustained.

The issue before the Court was whether a GST registration could be cancelled by a non-speaking order and whether the attachment of bank accounts could continue beyond the statutory period under Section 83 of the CGST Act.

Tex Fab India had filed a writ petition challenging the order dated 29 March 2021 cancelling its GST registration and the attachment of its bank accounts.

Counsel for the petitioner submitted that no opportunity of hearing was granted and that the prescribed procedure had not been followed. Reliance was placed on earlier decisions of the High Court requiring authorities to furnish reasons while passing such orders.

On the issue of bank attachment, the Court recorded that it was an admitted position that the provisional attachment had lapsed under Section 83 of the CGST Act. It accordingly directed that the petitioner's bank account be made operational forthwith.

The court quashed the cancellation order and remanded the matter to the designated officer, granting liberty to issue a fresh show cause notice within 15 days and to pass a fresh order in accordance with law. All contentions of the parties were kept open.

For Petitioner: Advocate Bharat Raichandani a/w Advocate Suraj Ghadigoankar along with Advocate Yashwardhan Sharma

For Respondents: Advocate Himanshu Takke, AGP, Advocate Jitendra B. Mishra a/w Advocate Rupesh D. Dubey along with Advocate Ashutosh Mishra