GST Registration cancellation order passed without application of mind quashed

GST Registration cancellation order passed without application of mind quashed by High Court

In a recent judgment, the Hon’ble Allahabad High Court has quashed GST Registration cancellation order passed without application of mind being violative of Article 14 of the Constitution of India.

ABCAUS Case Law Citation:
ABCAUS 3970 (2024) (04) HC

Important Case Laws relied upon:
Om Prakash Mishra v. State of U.P. & Ors.
M/s Namo Narayan Singh v. State of U.P. and others
Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Ors. (1998) 8 SCC 1

In the instant case, the applicant had filed a writ petition under Article 226 of the Constitution of India challenging the order passed for cancellation of GST registration and appellate order passed under Section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017 (the Act).

The case of the Petitioner was that the order for cancellation of registration had been passed without any application of mind as despite submission of reply by the assessee the order stated that no reply had been filed.

The Petitioner relied upon the judgment of the Division Bench of the Court wherein it was held that although no fault can be found with the appellate order dismissing the appeal as Appellate Authority does not have the power to condone the delay in terms of the scheme of the Act, however, the order cancelling the registration was without application of mind. A quasi judicial order which has an adverse effect on the right of the petitioner to run business as guaranteed under Article 19 of the Constitution of India, the same has been done without any application of mind which is neither the intent of the Act nor can it be held to be in compliance of the mandate of Article 14 of the Constitution of India.  As the appeal had not been decided on merit, the doctrine of merger will have no application and it is only the order which affects the petitioner and as the same is devoid of any reasons, the same can be challenged before this Court as decided by the Hon’ble Supreme.

The Petitioner also placed reliance on the judgment of the Court wherein it had recorded that every administrative authority or a quasi judicial authority should necessarily indicate reasons as reasons are heart and soul of any judicial or administrative order.

The Hon’ble High Court observed that the perusal of the order for cancellation of registration, there was no reason ascribed to take such a harsh action of cancellation of registration.

The Hon’ble High Court noted that the petitioner had relied upon a coordinate Bench judgment of the Court to emphasis the point that providing of reasons in order is of essence in judicial proceedings. The Court noted that in the present case, the facts were similar to the said case wherein though the appeal was barred by time under Section 107 of the Act. However, the Division Bench took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice.

In the light of the above, the Hon’ble High Court opined that in view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order along with appellate order was set aside and the petition was accordingly allowed.

It was however, directed that the petitioner shall file reply to the show-cause notice within a period of three weeks and the Adjudicating Authority i.e. Assistant Commissioner shall proceed to pass fresh order after giving an opportunity of hearing to the petitioner and after considering whatever defence he may take.

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