Facts of the Case

The Petitioner, M/s. Suvan Engineering Solutions Private Limited, is a company registered under the Companies Act, 1956, providing engineering drawing services and holding valid GST registration. On 15.12.2020, the Respondent issued a Show Cause Notice (SCN) proposing the cancellation of the Petitioner's GST registration due to a continuous failure to file statutory returns for six months. On 24.12.2020, the second respondent passed the impugned order cancelling the registration, noting that the taxpayer had submitted a "reply" on that day but paradoxically stated in the rationale that "since the taxpayer has not responded, outstanding tax liability could not be assessed". The Petitioner subsequently filed an appeal before the first respondent, which was summarily dismissed purely on the grounds of limitation without touching upon the merits.

Issues Involved

  1. Whether the order of cancellation of GST registration dated 24.12.2020 suffered from ex-facie non-application of mind by referencing a non-existent reply while simultaneously noting a lack of response.
  2. Whether the Appellate Authority erred in law by failing to examine the evident procedural infirmity and dismissing the statutory appeal solely on the technical ground of limitation.

Petitioner’s Arguments

  • The learned counsel for the petitioner argued that the cancellation order passed by the primary authority reflected a profound non-application of mind.
  • It was fairly submitted that the petitioner had not actually preferred a reply to the show cause notice within the window. Despite this, the authority recorded that a reply was filed and evaluated on 24.12.2020, only to state immediately below that the taxpayer failed to respond.
  • The petitioner contended that such contradictory findings vitiate the order under Article 226 of the Constitution of India, and the appellate authority failed to cure this defect.

Respondent’s Arguments

  • The learned counsel appearing on behalf of the Revenue defended the actions of the departmental authorities.
  • The respondents maintained that the petitioner had defaulted on its statutory obligations by failing to file GST returns continuously for a period exceeding six months, which legally empowered the proper officer to initiate suo motu cancellation proceedings under the Act.

Court Order / Findings

  • The Hon’ble High Court observed that two glaring contradictions were discernible from the record: the primary authority claimed to consider a reply on 24.12.2020, yet concurrently ruled that the taxpayer had not responded.
  • The Court held that the order dated 24.12.2020 reflected a clear and manifest non-application of mind.
  • The Bench noted that the first respondent (Appellate Authority) completely overlooked this vital aspect by disposing of the matter blindly on the point of limitation.
  • Drawing strength from its previous decision in identical matters, specifically W.P. No. 27071 of 2022 (decided on 27.06.2022), the High Court set aside both the order of cancellation and the appellate order.
  • The matter was formally remanded back to the file of the second respondent for a fresh hearing, allowing the petitioner 15 days to file a comprehensive reply and granting them liberty to submit all pending statutory returns.

Important Clarification

The Court clarified that statutory authorities cannot pass mechanical, boiler-plate orders that contain self-contradictory assertions, as it signals a total absence of independent evaluation. Even if an appeal is filed beyond the standard limitation period, a constitutional court exercising writ jurisdiction under Article 226 can intervene to strike down orders passed in blatant violation of the principles of natural justice or those tainted by an absolute non-application of mind. 

Section Involved

  • Article 226 of the Constitution of India (Writ Jurisdiction)
  • Section 29(2)(c) of the Central Goods and Services Tax (CGST) Act, 2017 (Cancellation of registration for continuous failure to file returns)
  • Section 107 of the CGST Act, 2017 (Appeals to Appellate Authority)

 Link to download the order –https://mytaxexpert.co.in/uploads/1783323800_1314compressed.pdf

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