GST Appeal on Registration Cancellation Rejected without Reasons: Allahabad HC sets aside Order, says Quasi-Judicial Orders Must Be Reasoned [Read Order]

Justice Piyush Agrawal observed that the appellate authority’s dismissal of the taxpayer's appeal filed against the rejection of revocation of registration was passed without assigning any reasons, and therefore could not be sustained in law.

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The issue concerned the petitioner's GST registration being canceled because, according to a study, there was no business activity at the primary place of business. A revocation application was filed in response to the cancellation order dated 16.09.2022, however it was denied on 12.01.2023 allegedly because no response was sent to the show cause notice.

An appeal was filed along with a delay condonation application, which too was dismissed on the ground of limitation, again without recording any independent reasons.

The petitioner contended that the cancellation was not in accordance with Section 29 of the CGST Act, 2017, which prescribes specific conditions for cancellation. Moreover, the appellate authority's failure to provide a reasoned order violated the mandate of Article 14 of the Constitution.

In support, reliance was placed on several High Court decisions, including M/s Surya Associates v. Union of India and M/s Shyam Sunder Sita Ram Traders v. State of U.P., where the courts had emphasized that reasons are the soul of judicial and quasi-judicial orders, and their absence renders such orders arbitrary and unsustainable.

The High Court agreed with the petitioner’s submissions and held that the impugned orders lacked application of mind and did not satisfy the constitutional requirement of reasoned decision-making.

The bench reiterated the principle that quasi-judicial orders which affect fundamental rights such as the right to carry on business under Article 19(1)(g) must be speaking orders. It was also clarified that in cases where the appeal is dismissed on the ground of limitation, the doctrine of merger does not apply, and the original order remains open to judicial review if it is unreasoned.

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The court, citing Om Prakash Mishra v. State of U.P. and Ashok Kumar Vishwakarma v. State of U.P held that the registration cancellation in the absence of specific findings or reasons, even if the appeal is time-barred, cannot stand.

Accordingly, the High Court allowed the writ petition, quashed all impugned orders, and granted liberty to the petitioner to file a fresh reply to the show cause notice. The adjudicating authority was directed to consider the matter de novo, strictly in accordance with law and after affording an opportunity of hearing.

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