Facts of the Case

M/s Bhumi Tech India Networking, Faizabad, through its proprietor, was a registered assessee under the Uttar Pradesh Goods and Services Tax Act, 2017. Its GST registration was cancelled by order dated 14.09.2022, which recited that the cancellation followed a show cause notice dated 31.08.2022 and the petitioner's reply dated 09.09.2022. The petitioner's appeal against the cancellation order was also dismissed on 25.09.2023 on the ground of delay. Aggrieved, the petitioner approached the Allahabad High Court, Lucknow Bench, contending that neither the show cause notice nor any reply as recorded actually existed on record, and that the cancellation order itself was devoid of reasons. The matter was heard by Justice Pankaj Bhatia, with learned Standing Counsel appearing for the State respondents, comprising the Commissioner, Commercial Tax, U.P., Lucknow, and two others, who did not seriously contest the factual position placed on record by the petitioner.

Issues Involved

  1. Whether a GST registration cancellation order that refers to a show cause notice and reply which were never actually served on or filed by the petitioner can be sustained.
  2. Whether an unreasoned cancellation order is valid in law.
  3. What relief follows once the primary cancellation order is found unsustainable, given the consequential dismissal of the delayed appeal.

Petitioner's Arguments

  • The impugned order refers to a show cause notice dated 31.08.2022 and a reply dated 09.09.2022, but neither the notice was ever served upon the petitioner nor did the petitioner file any such reply.
  • Even independent of the service defect, the cancellation order is bereft of any reasoning and cannot be sustained on that ground alone.
  • The issue raised is squarely covered by the earlier decision of the same Court in M/s Chandra Sain v. Union of India (Writ Tax No.147 of 2022), decided on 22.09.2022, on materially similar facts.

Respondent's Arguments

  • The Standing Counsel appeared for the State but did not seriously contest that the facts of the case were similar to those in M/s Chandra Sain, and no substantive defence of the cancellation order's validity or the manner of service of the show cause notice was advanced.

Court Order/Findings

  • Following its own reasoning in M/s Chandra Sain, and finding the facts of the present case to be similar, the Court held that the order cancelling the petitioner's GST registration dated 14.09.2022 could not be sustained and quashed it, granting the respondents liberty to pass a fresh order after issuing a proper show cause notice and considering the petitioner's defence.
  • Since the cancellation order itself was quashed, the subsequent appellate order dated 25.09.2023 dismissing the appeal on the ground of delay was held to lose significance and was also quashed.
  • The writ petition was accordingly allowed in these terms.

Important Clarification

A GST registration cancellation order that is founded on a show cause notice or reply which was never actually served on or filed by the assessee, or which otherwise fails to disclose any reasoning, is liable to be quashed on writ, with liberty to the department to proceed afresh in accordance with law. Where the foundational cancellation order falls, a subsequent appellate order dismissing an appeal against it (even on limitation grounds) automatically loses its force.

Sections Involved

  • Section 29, UP GST/CGST Act, 2017 — governs cancellation of GST registration, including the requirement of a proper show cause notice and hearing.
  • Section 107, UP GST/CGST Act, 2017 — provides the limitation period for filing an appeal against an adjudication or cancellation order.
  • Article 226, Constitution of India, 1950 — the writ jurisdiction invoked to challenge the cancellation and appellate orders.

Decision – In Favour of

The writ petition was allowed, and the decision favours the Assessee: both the cancellation order and the appellate order dismissing the delayed appeal were quashed, though the department retains liberty to issue a fresh, properly reasoned show cause notice and pass a fresh order after considering the petitioner's defence.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: WRIT TAX No. 215 of 2023
  • CNR: Not available
  • Coram: Hon'ble Justice Pankaj Bhatia
  • Decision Date: 30 November 2023
  • Disposal Nature: Allowed

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