2024 (7) TMI 292 - HC - GST

Cancellation of registration of petitioner - appeal preferred by the petitioner has been dismissed by the respondent no.3 as barred by limitation as provided under section 107(4) of the UPGST Act - applicability of Doctrine of Merger - HELD THAT - Admittedly from the perusal of the order dated 21.08.2023. it transpires that no reason has been assigned for cancellation of the registration of the petitioner. The order of cancellation is in the teeth of various judgments of this Court. The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law. Further since the appeal of the petitioner was dismissed on the ground of delay, this Court finds that the doctrine of merger will have no application considering the facts and circumstances of the present case. In M/S CHANDRA SAIN, SHARDA NAGAR, LUCKNOW THRU. ITS PROPRIETOR MR. CHANDRA SAIN VERSUS U.O.I. THRU. SECY. MINISTRY OF FINANCE, NEW DELHI AND 5 OTHERS 2022 (9) TMI 1047 - ALLAHABAD HIGH COURT this Court has held ' In the present case from the perusal of the order dated 13.02.2020, 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 purpose of inserting the provision under Rule 23 of Rules, 2017 as to service of notice upon the assessee is to provide an opportunity to him to move a revocation application so as to save the registration from being cancelled permanently and his business being hampered. The coordinate Bench of this Court in M/S ANSARI CONSTRUCTION VERSUS ADDITIONAL COMMISSIONER CENTRAL GOODS AND SERVICES TAX (APPEALS) AND 2 OTHERS 2020 (12) TMI 266 - ALLAHABAD HIGH COURT and two others while dealing with Section 29 of the GST, 2017 and Rule 23 of Rules, 2017, has held that once the Department has accepted the return and there remains no dues, the Department should not obstruct the business of an assessee. The order dated 21.08.2023 passed by the Assistant Commissioner, respondent no.3 is hereby quashed - Petition allowed.

Summary

Issues:
Cancellation of registration without reason under section 29 of the Act, Dismissal of appeal on the ground of delay under section 107(4) of the UPGST Act, Violation of Article 19 and Article 14 of the Constitution of India, Doctrine of merger not applicable in the present case.

Analysis:
The High Court entertained the writ petition due to the non-functionality of the GST Tribunal in the State of U.P. The petitioner challenged the cancellation of registration and dismissal of the appeal on the basis of delay. The petitioner argued that the cancellation was done mechanically without assigning any reason, violating section 29 of the Act. The respondent justified the cancellation due to non-filing of returns and taxes. The Court observed that the cancellation order lacked reasons, essential for any judicial or administrative order, and cited precedents emphasizing the importance of providing reasons in such orders.

In the case references provided by the petitioner, the Court highlighted the necessity of reasons in administrative and quasi-judicial orders, as per Article 19 and Article 14 of the Constitution of India. The Court emphasized that the cancellation of registration without proper reasoning violates the rights guaranteed under the Constitution. The doctrine of merger was found inapplicable due to the circumstances of the case, supporting the petitioner's argument against the cancellation order.

The Court referred to previous judgments where orders without reasons were set aside, stressing the importance of providing reasons in administrative and quasi-judicial decisions. The purpose of Rule 23 of the Rules, 2017 was discussed to emphasize the opportunity it provides to the assessee to prevent permanent cancellation of registration. The Court highlighted the aim of the Act and Rules to ensure smooth business operations without unnecessary hindrances.

Ultimately, the Court quashed the order of cancellation but directed the petitioner to respond to the show cause notice within three weeks. The Assistant Commissioner was instructed to pass a fresh order after considering the petitioner's defense. The writ petition was allowed, emphasizing the need for proper procedures and reasons in administrative and quasi-judicial decisions to uphold the rights of the parties involved.