The Calcutta High Court, in the matter of S.K.M. Timber Private Limited v. Superintendent of Central Tax, Burrabazar Division, Kolkata North CGST & CX Commissionerate and others, examined the validity of an order cancelling the Goods and Services Tax registration of the petitioner. The court’s analysis centred on whether the procedural requirement that the authority hearing the representation must also be the authority deciding the matter had been complied with.
According to the record, the petitioner had been issued a show‑cause notice proposing cancellation of its GST registration. The notice was served by the Superintendent of Central Tax, Burrabazar Division. Subsequently, a personal hearing was conducted before the same officer. However, the final order of cancellation was signed by the Commissioner of Central Tax, Kolkata North CGST & CX Commissionerate, a different authority within the same commissionerate.
The court observed that Section 29(2) of the Central Goods and Services Tax Act, 2017 mandates that the proper officer who issues the show‑cause notice and affords an opportunity of hearing must also pass the final order after considering the representation. The provision is designed to safeguard the audi alteram partem rule, ensuring that the decision‑maker evaluates the evidence and arguments presented during the hearing.
The bench noted that splitting the hearing and decision functions between two distinct officers undermines this safeguard. It held that such a split creates a risk of bias or the appearance of bias, as the officer who did not hear the petitioner’s submissions may not have fully appreciated the context of the case. Consequently, the order passed without the hearing officer’s involvement was deemed unsustainable in law.
In reaching this conclusion, the court relied on the settled principle that statutory procedures prescribing a hearing must be followed strictly; any deviation renders the resultant order liable to be set aside. The judgment cited earlier decisions of the Supreme Court and various High Courts which have emphasized that the authority conducting the inquiry must also be the authority rendering the decision, unless the statute expressly provides otherwise.
The court further observed that the petitioner had raised the objection during the proceedings, pointing out the discrepancy between the hearing and decision‑making authorities. The respondent’s contention that the Commissioner’s order was merely a formal endorsement of the Superintendent’s findings was rejected, as the statute does not permit such a bifurcation.
Accordingly, the Calcutta High Court set aside the GST registration cancellation order and directed the respondent to reconsider the matter de novo, ensuring that the same authority that conducts the hearing also passes the final order, in strict compliance with Section 29(2) of the CGST Act, 2017 and the principles of natural justice.
The decision reinforces the procedural rigor required in tax administration, particularly in matters affecting a taxpayer’s registration status. It serves as a reminder to GST authorities that adherence to the prescribed sequence of hearing and decision is not merely formalistic but substantive, and any lapse may lead to the nullification of the administrative action.