Case Law Details
Jai Nath Rai Construction Vs State of Up And 3 Others (Allahabad High Court)
Allahabad High Court held that passing of ex-parte order cancelling GST registration without giving any opportunity of hearing is against the principle of natural justice. Accordingly, order quashed.
Facts- The petitioner is a proprietorship concerned engaged in the business of construction work. On 22.5.2023, respondent no. 4 has issued a show cause notice for cancellation of registration under Rule 21 (d) of the Rules and thereafter ex parte order has been passed cancelling the GST registration of the petitioner without giving any opportunity of hearing to the petitioner.
Conclusion- This Court in the case of S.S. Traders has held that the denial of opportunity of hearing to the petitioner as is mandated in the first proviso to sub-section (2) of Section 29 of the Act of 2017 vitiates the proceedings as well as the orders cancelling the registration of the petitioner.
Held that in view of the facts and circumstances of the case as well as law laid down by this Court, the impugned orders cannot be sustained in the eyes of law and same are hereby quashed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the petitioner and learned Standing Counsel for the State-respondents.
2. By means of present petition, the petitioner is, inter alia, praying for the following relief::-
“i)”(a) To issue a suitable writ, order or direction issued in the nature of certiorari the Hon’ble Court be pleased to quash the impugned order dated 27.6.2024 passed by the respondent no. 3 in Defective Appeal No. 2425AAZA000144/2024 (GST) Year 2023-24.
(b) To issue a suitable writ, order or direction issued in the nature of certiorari the Hon’ble Court be pleased to quash the order passed for cancelling the GST registration of the petitioner vide order dated 01.6.2023 passed by respondent no. 4.”
3. Learned counsel for the petitioner submits that the petitioner is a proprietorship concerned engaged in the business of construction work and for that purpose he has obtained GST IN – On 22.5.2023, respondent no. 4 has issued a show cause notice for cancellation of registration under Rule 21 (d) of the Rules and thereafter ex parte order has been passed cancelling the GST registration of the petitioner without giving any opportunity of hearing to the petitioner. He submits that order of cancellation of registration has been passed in violation of principles of natural justice as no opportunity of hearing was given to the petitioner. He further submits that the respondent has passed the impugned order without application of mind. He submits that against the said order, an appeal has been filed which has also been dismissed vide order dated 27.6.2024.
4. In support of his submission, learned counsel for the petitioner has relied upon the judgement of this Court in the case of Surendra Bahadur Singh State of UP and others (Writ Tax No. 172 of 2023 decided on 23.8.2023), M/s Namo Narayan Singh Vs. State of UP and others (Writ Tax No. 1476 of 2022 decided on 10.10.2023) and M/s S.S. Traders Vs. State of UP (Writ Tax No. 651 of 2021 decided on 2.11.2021).
5. Per contra, learned Standing Counsel has supported the impugned orders.
6. After hearing learned counsel for the parties, the Court has perused the records.
7. The order of cancellation dated 6.2023, is extracted hereunder :-
Form GST REG-19
[See rule 22 (3)]
Reference Number: ZA090623006509H
Date 01/06/2023
To
VISHVBANDHU RAI
BELA SULTANPUR,LUDUHI SIPAH ROAD, Bela Sultanpur, Mau,
Uttar Pradesh, 275307
GSTIN/UIN:09BDSPR0333P2ZR
Application Reference Number (ARN): AA090523182863V
Date
Order for Cancellation of Registration
This has reference to show cause notice issued dated 22/05/2023.
Whereas no reply to the show cause notice has been submitted;
and whereas, the undersigned based on record available with this office is of the opinion that your registration is liable to be cancelled for following reason(s):
Rule 21(d)-person violates the provision of rule 10A (Bank details)
The effective date of cancellation of your registration is 01/06/2023
2. Kindly refer to the supportive document(s) attached for case specific -Not Applicable
3. It may be noted that a registered person furnishing return under sub-section (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order.
4. You are required to furnish all your pending returns.
5. It may be noted that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of
Place: Uttar Pradesh
Date :01/06/2023
Alok Chandra Gautam
Assistant Commissioner
Mau Sector-3
8. On perusal of the aforesaid order, it shows that no reason has been assigned while passing the impugned order.
9. The Division Bench of this Court in the case of Surendra Bahadur Singh (supra) has held as under:-
“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 07.01.2023, 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 07.01.2023 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 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.
8. In the present case from the perusal of the order dated 01.2023, 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 07.01.2023 (Annexure – 2) is set aside. The petition is accordingly allowed.
9. It is, however, directed that the petitioner shall file reply to the show-cause notice within a period of three weeks from The Adjudicating Authority i.e. Assistant Commissioner, Gonda shall proceed to pass fresh order after giving an opportunity of hearing to the petitioner and after considering whatever defence he may take.”
10. Similar view has been taken by another Division Bench of this Court in the case of M/s Kanhaiya Lal Construction and Supplier Superintendent Mainpuri CGST, (Neutral Citation No. 2024:-AHC120411-DB), wherein the Court has set aside the impugned order and remanded the matter.
11. This Court in the case of S. Traders (supra) has held as under:-
“A bare perusal of the show cause notice format prescribed under Rule 22(1) shows that there is a difference in the show cause notice dated 12.5.2021 issued to the petitioner and in the form of the show cause notice quoted aforesaid. The specific date and time is necessarily required to be mentioned in the notice for showing cause which is conspicuous by its absence in the notice to the petitioner. Moreover, the proviso to sub-section (2) of Section 29 mandates opportunity of hearing being provided to the person whose registration is proposed to be cancelled before cancelling the registration.
Paragraph 11 of the writ petition categorically mentions that after issuance of the show cause notice, no opportunity of hearing was granted to the petitioner by the respondent no.4 and that neither any date was fixed for hearing nor the petitioner was even called to “place the case” before the respondent no.4.
….
In the considered view of this Court, the denial of opportunity of hearing to the petitioner as is mandated in the first proviso to sub-section (2) of Section 29 of the Act of 2017 vitiates the proceedings as well as the orders cancelling the registration of the petitioner.”
12. In view of the facts and circumstances of the case as well as law laid down by this Court, the impugned orders cannot be sustained in the eyes of law and same are hereby
13. The writ petition succeeds and is allowed.
14. The petitioner is directed to file reply to the show cause notice within four weeks from today and the adjudicating authority is directed to proceed de novo and pass reasoned and speaking order in accordance with law, after providing due opportunity of hearing to the
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