Case Law Details
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.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Suyesh Pradhan, learned counsel for the petitioner, the learned Standing Counsel for the respondents and perused the material available on record.
2. Present petition has been filed challenging the order dated 10.03.2023 cancelling the GST registration of the petitioner as well as the order dated 10.09.2024 whereby the appeal preferred by the petitioner has been rejected by the appellate authority.
3. The facts, in brief, are that the petitioner is a proprietorship firm engaged in business of Mechanical Maintenance, handling jobs & landscaping etc. in the name and style of ‘M/s Laxmi Traders). A show cause notice for cancellation of registration was issued to the petitioner, directing the petitioner to furnish a reply to the notice within thirty days from the date of service of the notice.
4. The case of the petitioner is that he could not respond to the show cause notice issued by the respondents within the stipulated period on account of sickness, thus, an order came to be passed on 10.03.2023 whereby registration of the petitioner was cancelled without assigning any reason. Against the said order, the petitioner filed an appeal which was rejected by the appellate authority on the ground of limitation.
5. Learned counsel for the petitioner submits that since he has not been heard while passing the order dated 10.03.2023, as such the present petitioner is also entitled for the benefit benefit of the order passed by this Court in Writ Tax No.145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others) dated 26.09.2022. In the said judgment, the Court has held that the impugned order does not assign any reason whatsoever for cancelling registration of the petitioner and is passed only on the ground that reply to the show cause notice is not given. The non-submission of reply to the show cause notice cannot be a ground for cancellation of the registration. The relevant Paragraphs 9 and 10, of the judgment in Technosum India Pvt. Ltd. Lucknow (Supra), reads as under:-
“9. The Counsel for the petitioner argues that the appeal has been dismissed as being beyond limitation as such the doctrine of merger would not apply and the petitioner is fair entitled to seek judicial review of the order dated 03.01.2022 on the ground that the same is non speaking order. This Court while deciding Writ Tax No.147 of 2022 (M/S Chandrasen, Sarda Nagar, Lucknow vs Union of India and others) had held that the order of cancellation of registration or any other order passed either on administrative or on judicial side is without any reason and prima facie, without application of mind, the same does not stand the test of scrutiny under Article 14 of the Constitution of India.
10. Thus, following the said judgment rendered in the case of M/s Chandrasen (Supra), the writ petition deserves to be allowed.” In view thereof, the present petitioner is also entitled for the same relief. The benefit of the order dated 26.9.2022 passed in Writ Tax No.145 of 2022, shall also be made available to the present petitioner.”
10. In view thereof, the present petitioner is also entitled for the same relief. The benefit of the order dated 26.9.2022 passed in Writ Tax No.145 of 2022, shall also be made available to the present petitioner.
11. Accordingly, the present petition is allowed.
12. The order dated 10.03.2023 as well as the appellate order dated 10.09.2024 are set aside. The petitioner is permitted to appear before the respondent along with the reply to the show cause notice and the certified copy of this order as well as the copy of the judgment passed in Writ Tax No.145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others) dated 26.09.2022, within three weeks from today. In case, the petitioner appears along with the reply and the certified copy of this order, the respondents shall proceed to pass a fresh order in accordance with law.
Author Bio
