Laxmi Traders Vs Addl. Comm. Grade 2 (Appeal) (Allahabad High Court)
In Laxmi Traders Vs. Additional Commissioner (Appeal), the Allahabad High Court addressed the cancellation of GST registration due to non-submission of a reply to a show-cause notice (SCN). The petitioner, a proprietorship firm, had its GST registration cancelled by an order dated March 10, 2023, after failing to respond to the SCN within the stipulated time. The petitioner attributed the delay to sickness. An appeal filed against the cancellation was rejected by the appellate authority on the grounds of limitation. The petitioner argued that the cancellation order lacked reasoning, and the mere non-submission of a reply does not justify cancellation under the law. The counsel for the petitioner invoked a similar ruling from Technosum India Pvt. Ltd. Vs. Union of India (2022), where the court held that cancellation orders lacking valid reasoning could not withstand scrutiny under Article 14 of the Constitution.
The High Court agreed with the petitioner, ruling that non-submission of an SCN reply alone cannot be the basis for GST registration cancellation. Citing the judgment in Technosum India Pvt. Ltd., the court concluded that the cancellation order passed by the authorities was devoid of reasoning and should be set aside. Consequently, the court quashed the orders dated March 10, 2023, and September 10, 2024, and directed the petitioner to submit a reply to the SCN within three weeks. The authorities were instructed to review the matter and issue a fresh order based on the merits of the case. This ruling reaffirms the necessity for authorities to provide valid reasoning when canceling GST registrations, ensuring that decisions are made with due consideration of facts and law.
