Sec 29(2) of CGST Act puts embargo on Proper Officer to not cancel registration without hearing

While hearing a Writ Petition challenging cancellation of GST registration, the High Court of Kerala observed it to be a necessary pre-requisite to conduct personal hearing of the entity whose registration was being cancelled.

A Single Judge Bench of Justice T R Ravi referred to the provisions of Section 29 of the CGST Act 2017 and observed that under Section 29(2) of the CGST Act, the proviso also mentions that the Proper Officer shall not cancel the registration without giving an opportunity of being heard.

The Bench further observed that this requirement of giving an opportunity of hearing prior to cancellation of registration was of the nature of an embargo on the officer.

The Petitioner-Assessee was represented by Mr. Sri Harisankar V. Menon, Advocate, whereas the Respondent-Revenue was represented by Dr. Thushara James, Senior Government Pleader.

The Petitioner received a Show Cause Notice (SCN) proposing to cancel the GST registration held by the Petitioner on allegation of the Petitioner having defaulted in filing GST returns.

Subsequently, the officer who issued the SCN was succeeded by a new officer, who proceeded to pass order of cancellation of registration. The Petitioner alleged that such order came to be passed without first sending a Show Cause Notice and without giving a personal hearing.

The Petitioner canvassed that what was required was the satisfaction of the officer concerned before exercising discretion as to whether or not to cancel the GST registration, and thereby, the person passing an order of cancellation had to necessarily hear the party whose registration was proposed to be cancelled.

The Petitioner also raised the issue that the order issued by the incumbent officer, did not contain a Document Identification Number (DIN), which ran contrary to a Board Circular dated 24.12.2019, which mandated that every order contain a DIN, due to which the order was invalidated.

On hearing the contentions of both parties, the Bench observed that the proviso to Section 29(2) of the CGST Act mandated that the Proper Officer shall not cancel the registration without giving an opportunity of being heard, which is in the nature of an embargo on the officer.

The requirement that the succeeding Officer should put the assessee on notice is thus better emphasised by the usage of the words “proper Officer” in the proviso to Section 29(2) and that the necessary implication is that the proper officer has to hear the concerned person before cancelling the registration, which would mean that the assessee is put on notice by the succeeding officer also, the Bench clarified.

With these observations, the order passed by the succeeding officer was set aside and the Petitioner’s registration was deemed to be not cancelled, considering that the Petitioner had furnished the relevant documents in reply to the Show Cause Notice issued by the preceding officer.

Cause Title: M/s Ajit Associates Architectural Consultants Pvt Ltd Vs Assistant Commissioner Second Circle [WP (C) No. 41275 of 2022 / 2023-Enterslice-12-HC-Kerala -GST]

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