Facts of the Case

The petitioner, M/S Namo Narayan Singh, a proprietorship firm bearing GSTIN 09AJPC0956DIZG engaged in civil construction works for various government departments, challenged before the Allahabad High Court the order dated 20.12.2019 passed by the Assistant Commissioner, Commercial Tax, cancelling its GST registration, and the subsequent order dated 27.06.2022 passed by the Additional Commissioner dismissing its appeal. A show cause notice dated 07.12.2019 had been issued to the petitioner, to which no reply was filed, following which the registration was cancelled under Section 29(2) of the GST Act. The writ was entertained by the High Court because the GST Appellate Tribunal was not functional in Uttar Pradesh at the relevant time, pursuant to a Central Government Gazette notification dated 14.09.2023.

Issues Involved

  1. Whether the show cause notice dated 07.12.2019, which did not specify any date or time for the petitioner to appear as required under Section 29(2) of the Act, was valid.
  2. Whether the cancellation order dated 20.12.2019, passed without assigning any reason, could be sustained.
  3. Whether the appellate order dated 27.06.2022, dismissing the appeal without recording cogent reasons, violated the principles of natural justice.

Petitioner's Arguments

  • The show cause notice dated 07.12.2019 did not mention any date or time for the petitioner to appear before the authority, as mandated under Section 29(2) of the Act, rendering it vague and legally defective.
  • The cancellation order itself was passed without assigning any reason whatsoever for cancelling the registration.
  • The appellate authority summarily dismissed the appeal without recording any cogent reason for doing so.
  • Given these cumulative defects, both impugned orders were liable to be set aside and the writ petition ought to be allowed.

Respondent's Arguments

  • The learned Additional Chief Standing Counsel supported the impugned order and defended the process followed by the department.
  • The respondents prayed for dismissal of the writ petition, contending that no interference was warranted with the cancellation or the appellate order.

Court Order/Findings

  • On perusal of the impugned order, the Court found that it had been passed without recording any cogent reason for cancelling the GST registration, and that the appellate authority too had dismissed the appeal summarily without assigning any reason.
  • Relying extensively on Supreme Court precedent (The Secretary & Curator, Victoria Memorial v. Howrah Ganatantrik Nagrik Samity and others; Chandana Impex Pvt. Ltd. v. Commissioner of Customs, New Delhi), the Court held that recording of reasons is a settled, mandatory requirement of natural justice for both administrative and judicial orders.
  • An order — whether cancelling GST registration or dismissing an appeal against such cancellation — that fails to disclose reasons cannot be sustained; the giving of reasons is essential to a meaningful right of appeal and to demonstrate genuine application of mind.
  • The writ petition was allowed, both impugned orders were set aside, and the matter was remitted to the first appellate authority to pass a fresh reasoned, speaking order, preferably within two months from production of a certified copy of the order, after affording reasonable opportunity of hearing to the parties.

Important Clarification

  • A GST registration cancellation order, and any appellate order affirming or rejecting a challenge to it, must record reasons; failure to do so is fatal irrespective of whether the underlying non-compliance (e.g., non-filing of returns) is otherwise undisputed.
  • An unreasoned order is liable to be set aside on this ground alone, without the writ court needing to examine the substantive merits of the cancellation.
  • In such cases, the usual relief is remand to the appellate/original authority for a fresh reasoned order within a fixed timeframe, rather than a decision on merits by the writ court itself.

Sections Involved

  • Section 29(2), CGST/UP GST Act, 2017 — empowers the proper officer to cancel GST registration, including for continuous non-filing of returns, but requires due process including notice and opportunity of hearing.
  • Article 226, Constitution of India — writ jurisdiction invoked because the GST Appellate Tribunal was not functional in Uttar Pradesh at the relevant time.

Decision – In Favour of

The decision is in favour of the Assessee: the writ petition was allowed, both the cancellation order and the appellate rejection were set aside for want of reasons, and the matter was remanded to the appellate authority for a fresh, reasoned order within a fixed timeframe.

Related Case Laws

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

Case Details

  • Court: Allahabad High Court
  • Case No.: WRIT TAX No. 1476 of 2022 (Neutral Citation 2023:AHC:194723)
  • CNR: Not available on record
  • Coram: Hon'ble Justice Piyush Agrawal
  • Decision Date: 10-10-2023
  • Disposal Nature: Allowed; remanded to appellate authority

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