Sunny Enterprises Vs Union of India (Allahabad High Court)
Summary: The Allahabad High Court considered a writ petition challenging the cancellation of the petitioner’s GST registration under Section 29(2)(d) of GST Act by order dated 17.11.2022 and the subsequent appellate order dated 29.09.2025, whereby the appeal was dismissed as being beyond limitation.
The petitioner submitted that no effective opportunity of hearing had been granted before cancellation of registration. It was argued that the discretionary power under Section 29(2) could not be exercised mechanically and that the cancellation order was passed ex parte. According to the petitioner, day-to-day GST compliances and portal operations were being handled by the petitioner’s accountant, with the result that the petitioner remained unaware of the show cause notice uploaded on the GST portal and could not submit a reply within the prescribed time.
The Revenue, on the other hand, submitted that an opportunity had been granted but was not availed by the petitioner, and therefore the cancellation order could not be characterised as having been passed without an opportunity of hearing.
The Court noted that the issue had similarly been considered by a coordinate Bench in M/s Chandra Sain Vs Union of India and Ors, Writ Tax No. 147 of 2022. In that matter, the coordinate Bench had considered a delayed GST appeal and the underlying cancellation of registration. The appellate authority had considered itself barred from condoning the delay under Section 107(4) of the GST Act.
The coordinate Bench had observed that, although the appellate authority could not condone the delay under the statutory scheme, the cancellation order itself was liable to scrutiny because it disclosed no application of mind. The order had an adverse effect on the petitioner’s right to carry on business under Article 19 of the Constitution and was alleged to be inconsistent with Article 14. The coordinate Bench also considered the principle that where an appeal has not been decided on merits, the doctrine of merger would have no application to an otherwise independently challengeable original order. It relied upon Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Ors., (1998) 8 SCC 1.
The coordinate Bench further relied upon Om Prakash Mishra v. State of U.P. & Ors., Writ Tax No. 100 of 2022, decided on 06.09.2022, for the proposition that administrative or quasi-judicial authorities should necessarily indicate reasons, since reasons constitute the heart and soul of a judicial or administrative order.
Applying that reasoning, the Court found in the present case that the order dated 29.09.2025 contained no reason ascribed for taking the harsh action of cancellation of registration and did not satisfy the test of Article 14 because it was without application of mind. The appellate order dated 29.09.2025 was consequently set aside.
The Court thereafter quashed and set aside both the cancellation order dated 17.11.2022 and the appellate order dated 29.09.2025. The petitioner was directed to file its reply to the show cause notice within three weeks. The adjudicating authority was directed thereafter to pass a fresh order after affording opportunity of hearing to the parties and taking note of the defence raised by the petitioner. The petition was accordingly allowed on those terms.
Cases Discussed
- M/s Chandra Sain Vs Union of India and Ors, Writ Tax No. 147 of 2022
- Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Ors., (1998) 8 SCC 1
- Om Prakash Mishra v. State of U.P. & Ors., Writ Tax No. 100 of 2022, decided on 06.09.2022
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the petitioner and Sri Gyanendra Kumar Mishra holding brief of Sri Mahendra Kumar Mishra counsel for Union of India as well as Sri Kuldeep Srivastava learned counsel for the respondent nos.2, 3 and 4.
2. Present petition has been filed challenging the order dated 17.11.2022 whereby the petitioner’s registration was cancelled under Section 29(2)(d) of GST Act as well as the appellate order dated 29.09.2025 whereby the appeal was dismissed as being beyond limitation.
3. Submission of learned counsel for the petitioner is that prior to passing of the order, no opportunity of hearing was granted. He argues that provisions of Section 29(2) are discretionary powers and cannot be exercised mechanically. He argues that the registration cancellation was exparte in nature and the petitioner could not submit his reply as he was unaware of the show cause notice as the day to day GST compliances and portal operations were being handled by the petitioner’s accountant, consequently, the petitioner could not take notice of the show cause notice uploaded on the GST portal and therefore was unable to submit any reply within time.
4. It has further been urged that the petitioner could not furnish his reply due to unaware of the notice and the order was patently exparte. Apparently, it is a case where the petitioner was not granted any effective opportunity of hearing accordingly, the impugned order cannot be sustained.
5. Learned Additional Chief Standing counsel has submitted that the opportunity was granted which was not availed by the petitioner hence, it cannot be said that the order was passed without affording any opportunity of hearing.
6. Having heard learned counsel for the parties and from a perusal of the material on record, this Court finds that the issue involved in the instant petition, similarly has been considered by a coordinate Bench of this Court in M/s Chandra Sain Vs Union of India and Ors passed in Writ Tax no.147 of 2022 wherein coordinate Bench after noticing the order of cancellation of registration in para-5 to 7 has held as under:
”5. The petitioner could not prefer an appeal, which is prescribed under the Act, on account of Covid – 19 situation and the fact that the petitioner fell ill for which medical certificates were granted, as such, the petitioner preferred a delay condonation application alongwith the appeal. The Appellate Authority was of the view that in view of the Bar created under Section 107(4) of the GST Act, the delay cannot be condoned, as such, he proceeded to dismiss the appeal holding that no power of condonation of delay exists in the statutory scheme of Section 107 of GST Act.
6. Learned counsel for the petitioner argues 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, he argues that the order cancelling the registration is without application of mind; he draws my attention to the impugned order dated 13.02.2020, which does not disclose any application of mind. He, thus, argues that the 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. He further argues that as the appeal has not been decided on merit, the doctrine of merger will have no application and it is only the order dated 13.02.2020 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 Court in the case of Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Ors. – (1998) 8 SCC 1.
7. He further places reliance on the judgment of this Court in the case of Om Prakash Mishra v. State of U.P. & Ors.; Writ Tax No.100 of 2022 decided on 06.09.2022 wherein this Court 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.”
7. In the present case from the perusal of the order dated 29.09.2025, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. 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 dated 29.09.2025 is set aside.
8. In view of the aforesaid, the cancellation order dated 17.11.2022 as well as appellate order dated 29.09.2025 are quashed and are set aside.
9. The petitioner is directed to file its reply to the show cause within three weeks from today, the adjudicating authority shall thereafter pass a fresh order after affording opportunity of hearing to the parties and taking note of the defence raised by the petitioner.
10. The present petition stands allowed in above terms.
