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Suspension of GST Registration without giving opportunity of being heard - Constitutional validity of Rule 21A(2) of CGST Rules?

Bombay High Court issued notice to Government on a petition filed against amendment in GST Rules, by which GST registration of a taxpayer can be suspended without giving any opportunity of being heard.

The Court was hearing a petition challenging the constitutional validity of the amendment in Rule 21A(2), which omitted the words "after affording the said person a reasonable opportunity of being heard" before suspending GST Registration of a Petitioner.

In the present case, Petitioner's GST Registration has been suspended in Aug 2022 without providing opportunity of hearing as per amended Rule 21A(2) of CGST Rules. As per Plea, Petitioner received below show cause notice for cancellation of their GST registration.

Notice stated that "please note that your registration stands suspended with effect from 08/08/2022".

What is the new Rule 21A(2) - Suspension of Registration?

As per New Rule, GST Registration of a taxpayer can be suspended without giving any opportunity of hearing. Below is the extract from Rule 21A(2) of CGST Rules. 

Rule 21A - Suspension of registration.

(1) …

(2) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29 or under rule 21, he may [,after affording the said person a reasonable opportunity of being heard,] suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration under rule 22.

Petitioner claimed that the original Rule 21A(2) of the CGST Rules, 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. This amendment to the Rules goes against the principle of natural justice because implication of such a suspension is drastic.

A registered person whose registration has been suspended cannot make any taxable supply during the period of suspension and shall not be granted any refund during the period of suspension. Therefo.......
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TaxReply


Sep 7, 2022


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