Facts of the Case

M/S Sai Trades, Bikapur, Faizabad challenged an order dated 20 April 2022 cancelling its GST registration under Section 29(2)(d) of the GST Act, as well as the appellate order dated 27 September 2025 dismissing the appeal as beyond limitation. The petitioner contended that no opportunity of hearing was granted prior to the ex-parte cancellation.

Issues Involved

  1. Whether the cancellation of GST registration under Section 29(2), being a discretionary power, could be exercised mechanically and without recorded reasons.

Petitioner's Arguments

  • The registration cancellation was ex-parte, without any opportunity of hearing, and the discretionary power under Section 29(2) cannot be exercised mechanically; even though the appellate authority lacked power to condone the delay, the foundational order itself was patently non-reasoned and thus void of application of mind.

Respondent's Arguments

  • An opportunity had been granted to the petitioner, which was simply not availed, so the order could not be said to have been passed without affording any opportunity of hearing.

Court Order / Findings

  • Following the coordinate Bench decision in M/s Chandra Sain v. Union of India (Writ Tax No. 147 of 2022), which in turn relied on Whirlpool Corporation v. Registrar of Trademarks, the Court held that a quasi-judicial order affecting the fundamental right to carry on business under Article 19, if passed without application of mind and without recorded reasons, fails the test of Article 14 and can be challenged directly, since the doctrine of merger does not apply where the appeal itself was not decided on merits.
  • On perusal, the impugned cancellation order dated 20 April 2022 disclosed no reason whatsoever for the harsh step of cancellation; it was accordingly quashed, along with the appellate order dated 27 September 2025.
  • The petitioner was directed to file its reply to the show cause notice within three weeks, following which the adjudicating authority must pass a fresh, reasoned order after hearing the parties.

Important Clarification

  • The discretionary power to cancel GST registration under Section 29(2) must be exercised with application of mind and recorded reasons; a wholly non-reasoned cancellation order can be challenged directly before the High Court even where the statutory appeal was dismissed as time-barred, since the doctrine of merger has no application to an appeal not decided on merits.

Sections Involved

  • Section 29(2), CGST/UPGST Act, 2017 – cancellation of registration.

Decision – In Favour of

Decided in favour of the Assessee – both the cancellation order and the time-barred appeal dismissal are quashed, with directions for a fresh, reasoned order after hearing.

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: Writ Tax No. 1160 of 2025
  • Coram: Hon'ble Justice Jaspreet Singh
  • Date of Order: 28 October 2025

Link to Download the Order

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