Khushi Bajpai
Published on: September 6, 2022 at 20:40 IST
In a case challenging the Goods and Services Tax Rules of 2017 (GST Rules), which deny the assessee the right to be heard before suspending the GST registration, the Bombay High Court recently served notice to the Attorney General for India and Advocate General of Maharashtra.
The Hon. Justices KR Shriram and AS Doctor’s panel noted that the petition had contested changes to the Maharashtra GST and Central GST guidelines.
The notice was sent to both Attorney General KK Venugopal and Advocate General Ashutosh Kumbhakoni in light of this.
SAT Industries Ltd., the petitioner, approached the High Court after receiving a show-cause notice for registration cancellation.
“Please note that your registration is suspended with effect from 08/08/2022,” the notification purportedly read.
The petitioner argued that the order contained in the show cause notice had been made without giving him or her a chance to be heard.
In order to challenge the constitutional legitimacy of the deletion of the phrase “after allowing the aforementioned individual a reasonable opportunity of being heard” from sub-rule 2 of Rule 21A of the Central GST Rules 2017, the petitioner went to court.
In accordance with Rule 21A, if there are discrepancies or irregularities between the GSTs, the proper tax officer may cancel a party’s registration. The officer has the authority to suspend the registration until the discrepancies can be clarified.
However, the clause requiring a reasonable opportunity for the assessee to be heard before suspending the registration was removed by way of a notification dated December 12, 2020.
“Where the proper officer has reasons to believe that a person’s registration is liable to be cancelled under section 29 or under Rule 21, he may,[,] suspend the registration of such person with effect from a date to be determined by him, pending the conclusion of the proceedings for cancellation of registration under rule 22,” reads the new sub-rule 2.
According to the argument made in the petition submitted through Nikhil Rungta, Article 19(1)(g) of the Indian Constitution’s fundamental rights were blatantly violated by not first hearing the petitioner before suspending the license.
The removal of the phrase, according to senior advocate Vineet Kothari and attorney Mehul Kothari, violated the norms of natural justice because the implications of such a suspension are severe.
He argued that a registered person whose registration has been stopped is not permitted to make any taxable supplies and is not entitled to any refunds during that time.
Jyoti Chavan for State, a different government attorney, acknowledged notification on the Advocate General’s behalf.
The authorities were given two weeks to submit their reply, and on October 10th, the plea was scheduled for hearing.
The Bench granted the petitioner ad-interim relief and delayed the effects and application of the show-cause notice that suspended the petitioner’s registration certificate under the GST Act.
Due to this, the registration was momentarily reinstated while the case was heard.