2022 (9) TMI 1047 - HC - GST

Cancellation of registration of petitioner - Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months - petitioner did not have knowledge of the show-cause notice, thus, the reply could not be filed - non-application of mind - HELD THAT - In the present case from the perusal of the order dated 13.02.2020, it is found that 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 13.02.2020 (Annexure 2) is set aside. The petition is accordingly allowed.

Summary

Issues:
Challenge to cancellation of registration under GST Act due to non-filing of returns, Appeal dismissal for delay condonation, Compliance with principles of natural justice in cancellation order.

Analysis:
1. Cancellation of Registration: The petitioner, a proprietorship concern registered under the GST Act, challenged the cancellation of registration due to non-filing of returns. The cancellation order dated 13.02.2020 lacked reasoning and application of mind, violating principles of natural justice. The petitioner argued that the cancellation adversely affected their right to conduct business, invoking constitutional guarantees under Article 19 and Article 14. The High Court set aside the cancellation order, emphasizing the necessity for reasons in administrative or quasi-judicial decisions, as established in precedents like Whirlpool Corporation v. Registrar of Trademarks.

2. Dismissal of Appeal: The petitioner's appeal against the cancellation order was dismissed by the Appellate Authority due to delay beyond the prescribed period, citing Section 107(4) of the GST Act. The petitioner contended that the delay was due to unforeseen circumstances, including illness and the COVID-19 situation. While acknowledging the lack of power to condone the delay under the statutory scheme, the Court held that the dismissal of the appeal did not preclude challenging the cancellation order itself, as the latter lacked justification and application of mind.

3. Compliance with Principles of Natural Justice: The Court emphasized the importance of providing reasons in administrative or quasi-judicial orders, as reiterated in the judgment of Om Prakash Mishra v. State of U.P. The lack of reasoning in the cancellation order dated 13.02.2020 led to its set aside, highlighting the need for adherence to Article 14 of the Constitution of India. The Court directed the petitioner to respond to the show-cause notice within three weeks, with the Adjudicating Authority instructed to issue a fresh order after affording the petitioner a hearing and considering their defense.

4. Future Compliance: With the cancellation order set aside, the Court directed that further actions be taken in accordance with the law prescribed under Section 29 of the GST Act. This decision ensures that the petitioner's rights are protected, and due process is followed in any subsequent proceedings related to the registration cancellation issue.