1.1 Brief of the Case

1.2 Background of the case

• The petitioner applied for GST registration u/s 22 read with Section 25 of the CGST Act and in terms of Rule 8 of the CGST Rules for operating a rice mandi. SCC Online.
• The registry acknowledged receipt of the application and conducted physical verification of the petitioner’s business premises.
• The department issued a notice because the principal place of business details were not attached to the application.
• The petitioner responded by uploading a registered rental/lease deed as proof of his principal place of business.
• The authority then issued an order rejecting the registration application with a cryptic single word: “rejected” dated 13.05.2022, without giving reasons or explaining any basis for rejection.

1.3 Key Provisions discussed

• Section 22 & Section 25 of the CGST Act

• Rule 8 and Rule 9(4) of the CGST Rules, 2017

1.4 Petitioner’s Arguments

• The impugned order was non-speaking, cryptic and arbitrary, merely stating “rejected” without laying out reasons.
• The petitioner had responded to the notice by uploading the required principal place of business proof, but the authority ignored this in issuing the rejection.
• Hence the order violated principles of natural justice and statutory procedural requirements under the CGST Act and Rules

1.5 Respondent’s Arguments

The use of the word “may” in Rule 9(4) gives the proper officer discretion whether to assign reasons for rejection and therefore the requirement to record reasons may not be mandatory in every case.

1.6 Court’s Findings and Analysis

• The word “may” in Rule 9(4) only covers the discretion to reject, not an option to ignore recording reasons or violate natural justice

• If the officer intends to reject an application, he must comply with procedure including recording adequate reasons in writing and in a manner reflecting that he considered the taxpayer's response.
• An order which is entirely non-speaking and fails to deal with the petitioner's explanation is arbitrary, indefensible and contrary to the statutory scheme.
• Principles of natural justice require that before rejecting a registration application, the assessing officer must consider the taxpayer's response and articulate why it is insufficient.

1.7 Court’s Decision

• The impugned order dated 13.05.2022 rejecting the GST registration application is set aside.
• The petitioner must be heard on the objections raised, and the application processed in accordance with law.
• The respondent authority was directed to decide the registration application on merits within four (4) weeks from the date of the order after affording a fair hearing.

1.8 Significance of the Judgment

• It reinforces that GST registration refusal cannot be a bare order without reasons; officers must record reasons in writing.
• It upholds principles of natural justice in GST registration proceedings.
• Strengthens taxpayer protection by preventing mechanical credit denial
• Aligns with principles of natural justice under Article 226

1.9 Conclusion

In B. C. Mohankumar, the Madras High Court held that the GST authority’s refusal to grant registration — by a monosyllabic order simply stating “rejected” without any reasons or consideration of clarification documents — was flawed. The order violated the statutory mandate under Rule 9(4) and principles of natural justice. The High Court set aside the order and directed the authority to reconsider the application with proper reasoning and hearing.