GST amendment on registration cancellation: Bombay HC notice to Centre

The Bombay High Court has issued notices to the Union and Maharashtra governments seeking their response to a petition against an amendment to the Goods and Services Tax (GST) Rules by which GST registration can be suspended without giving the affected party a hearing.

A division bench of Justices K R Shriram and A S Doctor, on August 29, issued notice to the Attorney General of India and Advocate General of Maharashtra as the plea challenges the validity of a provision of law. The order was made available on Monday.

The court was hearing a petition filed by SAT Industries Limited challenging a show cause notice issued to it in August 2022 for cancellation of its GST registration.

As per the firm's plea, in the notice itself it has been stated that "please note that your registration stands suspended with effect from 08/08/2022".

Senior counsel Vineet Kothari, appearing for the petitioner, claimed the original Rule 21A (2) of the Central Goods and Service Tax Rules, 2017 provided that a party shall be given a reasonable opportunity of being heard before the passing of a suspension order.

However, this provision was deleted in December 2020, Kothari said, adding this amendment to the Rules goes against the principle of natural justice because implication of such a suspension was drastic.

The petition challenged the constitutional validity of the amendment, which omitted the words "after affording the said person a reasonable opportunity of being heard".

It further said suspending the GST registration without hearing the party concerned was in violation of fundamental rights under Article 19(1)(g) of the Constitution of India.

The court directed both the Union and state governments to file their affidavits to the plea and posted the matter for further hearing on October 10.

By way of interim relief, the HC granted an interim stay on the show cause notice issued to the petitioner company.