High Court Quashes GST Cancellation Non-Speaking Order; Remands Matter for De Novo Adjudication

Obtaining GST registration is the most important part of business when the aggregate turnover crosses the specified limit. It allows you to collect GST, Claim ITC and stay compliant. However, what if you receive a cancellation order from the GST department without any reason or explanation? The same thing happened with Janardan Prasad, a registered firm which carries out business of work contract, retail business, and wholesale sale business.

The company received a show cause notice on 14.01.2023 for not filing GST returns for 6 months. As per the company, while issuing the show cause notice, the opportunity for hearing was not granted. The petitioner also filed a reply. But later, it received a GST cancellation order dated 03.03.2023, which stated that the reply was not submitted. The registration cancellation did not mention any valid reason. It was cancelled without giving any valid reasons. When the company filed an appeal before the appellate authority, it dismissed the appeal because it was filed late without even looking at the merit of the case. The company was not satisfied with this rejection and approached the Allahabad High Court.

The court observed that even though the petitioner had submitted the reply, the tax officer did not consider it. This shows that the orders have been filed without application of mind. The court referred to an earlier judgement which held that Judicial orders must follow proper reasoning and fairness. Without giving proper reasons in the order violates Article 14 and Article 19 of the Indian Constitution.

Therefore, the High Court ruled in favour of the company and quashed the orders. The matter is remanded to the adjudicating authority to pass a fresh notice with the valid reason for the cancellation within 10 days. The court directed the company to submit its reply within 15 days after receiving the notice, and after which the authority is required to pass a speaking order within one month after giving an opportunity of hearing to the petitioner.