Authority issuing notice of suspension is bound to pass final order of cancellation of registration

Case details: Avon Udhyog v. State of Rajasthan - [2021] 128 taxmann.com 122 (Rajasthan)

Judiciary and Counsel Details

• • Dinesh Mehta, J.
  • Sharad Kothari for the Petitioner.
  • Hemant Dutt for the Respondent.

A search has been conducted on petitioner’s premises and subsequently, the notice of cancellation of registration is issued to the petitioner. The petitioner has furnished his detailed reply beyond the time limit of 7 days prescribed under sub-rule (1) of Rule 22 of the Central Goods and Services Tax Rules, 2017. The authorities have not pass any final order regarding petitioner’s registration, due to which petitioner’s right to trade has been kept suspended.

The petitioner submitted that either a reasonable opportunity of hearing must be granted to an assessee before suspending the registration or the Assessing Authority is required to take a final decision pursuant to notice of cancellation of registration.

High Court Held

The Hon’ble Rajasthan High Court stated that suspension of registration has its own consequences & it brings the entire business to a standstill. In a way it is worse than cancellation. Against cancellation, an assessee can take legal remedies but against suspension pending an enquiry, even if the assessee chooses to take remedies, the authorities or the Court(s) would normally show reluctance.

It was held that the proceedings of cancellation of registration cannot be kept hanging fire on any pretext, including where the assessee failed to file reply within the time allowed. The Authority issuing the notice is statutorily bound to pass order in terms of sub-rule (3) of Rule 22 (Supra).