In a recent ruling, the Allahabad High Court ruled that the non-submission of the reply to the Show Cause Notice ( SCN ) cannot be a ground for the cancellation of Goods and Services Tax ( GST ) registration. The court set aside the orders.
Justice Alok Mathur, concurring with the petitioner’s counsel, referred the case Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others where it was 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.”
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The petitioner, a proprietorship firm engaged in mechanical maintenance and landscaping, had its registration canceled on 10.03.2023 due to failure to respond to the SCN within the stipulated time, caused by sickness. The appeal filed by the petitioner was dismissed on the grounds of limitation.
The bench heard the submissions of Suyesh Pradhan, counsel for the petitioner, the Standing Counsel for the respondents and perused the material available on record.
The court noted the submission of the petitioner’s counsel on the earlier ruling in Technosum India Pvt. Ltd., which clearly stated that mere non-submission of a reply to an SCN does not justify the cancellation of GST registration, especially when the order fails to explain the reasons behind such action.
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The counsel for the petitioner argued that the petitioner had not been heard before the order was passed, and as such, was entitled to the same relief granted in the Technosum case.
Thus, the court found merit in this argument, granting the petitioner relief by setting aside the cancellation and appellate orders. The petitioner has been allowed to submit a reply to the SCN within three weeks, and the authorities are instructed to issue a fresh order in accordance with the law.
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