In a recent ruling, the Allahabad High Court quashed the Goods and Services Tax ( GST ) registration cancellation order due to issuance without stating specific reasonings for the cancellation.
Jai Nath Rai Construction, the petitioner was engaged in the construction business and held a GST registration. On May 22, 2023, a show cause notice was issued by respondent No. 4 (Assistant Commissioner, Mau Sector-3) to cancel the petitioner’s GST registration under Rule 21(d) of the Central Goods and Service Tax ( CGST ) Rules, 2017.
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The petitioner did not submit a response, leading to an ex-parte order of GST cancellation on June 1, 2023, for not complying with Rule 10A ( related to bank details ). The petitioner filed an appeal, which was dismissed on June 27, 2024, without any further hearing.
The petitioner challenged the cancellation of registration before the Allahabad HC arguing that the cancellation of GST registration was done without giving them an opportunity for a hearing, which is a violation of the principles of natural justice.
The petitioner’s counsel argued that the impugned orders lacked proper reasoning and application of mind, as required under the law. The counsel relied on previous judgments by the High Court, including Surendra Bahadur Singh vs. State of UP and others, which set aside similar orders due to the lack of reasoning and opportunity for hearing.
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On the other hand, the respondent’s counsel relied on the authority’s orders and did not provide substantial reasoning beyond supporting the validity of the cancellation.
A single bench led by Justice Piyush Agrawal, J. reviewed the impugned order and observed that the order of cancellation was devoid of any specific reasoning. The court referred to previous rulings by the same court, where similar orders were quashed for lack of reasoning and violation of natural justice.
The court reaffirmed the principle that a quasi-judicial order affecting a party’s right to do business, protected under Article 19 of the Constitution of India, must be backed by proper reasoning and adherence to due process, including the opportunity for a hearing.
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Therefore, the court quashed the impugned orders, including the cancellation of the petitioner’s GST registration and the dismissal of the appeal. The petitioner was directed to file a reply to the show-cause notice within four weeks. The petitioner’s writ petition was allowed.
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