M/S. Kakar Automobiles vs. Union Of INDIA

Held

The Court held that the cancellation of GST registration has serious civil consequences, impacting the right to livelihood. It observed that the Appellate Authority had dismissed the petitioner's appeal solely on the ground of limitation under Section 107(1) and 107(4) of the CGST/RGST Acts, without considering the petitioner's explanation for the delay, the nature of the ailment pleaded, or the grave consequences of non-condonation. The Court found the appellate order to be cryptic and non-speaking on these material aspects. While acknowledging that the Appellate Authority is bound by the statutory cap on condoning delay, the Court asserted its constitutional jurisdiction under Articles 226 and 227 to ensure matters are considered on merits when the explanation for delay is plausible and the consequences of non-condonation are disproportionate. The Court found the petitioner's explanation for the delay, based on medical incapacity and subsequent steps taken upon knowledge of cancellation, to be sufficiently explained on a prima facie basis. The Court noted that the respondents had not pointed out any serious prejudice to the revenue. Therefore, the Court held that the refusal to entertain the appeal solely on limitation denied the petitioner an effective appellate remedy. The Court set aside the appellate order dated 18.12.2024 and restored the appeal to the file of the Appellate Authority, directing it to be heard and decided on merits without being dismissed on the ground of limitation. All contentions on the merits of the Show Cause Notice and cancellation order were left open for the Appellate Authority to consider. The Appellate Authority was directed to afford a reasonable opportunity of hearing and pass a reasoned order.

Facts

The petitioner, M/s. Kakar Automobiles, filed a writ petition challenging an order dated 01.04.2026 passed by the Additional and Joint Commissioner, State Tax Circle, Nagaur Ajmer Rajasthan (Respondent No. 4), and an order dated 18.07.2024 passed by the Appellate Authority, State Tax Ajmer Rajasthan (Respondent No. 5). The petitioner sought quashing of these orders, condonation of delay in filing an appeal, and other suitable relief. The petitioner's GST registration had been cancelled, and their appeal against this cancellation was dismissed by the Appellate Authority solely on the grounds of limitation. The petitioner contended that the delay was due to genuine reasons, including the proprietor's illness, and that the cancellation of registration had severe civil consequences affecting their livelihood.

Key Issues

1. Whether the impugned order dated 01.04.2026 passed by the Additional and Joint Commissioner, State Tax Circle, Nagaur Ajmer Rajasthan, and the impugned order dated 18.07.2024 passed by the Appellate Authority, State Tax Ajmer Rajasthan, are violative of Articles 14, 19(1)(g), and 301 of the Constitution of India? 2. Whether the delay in filing the appeal before the Additional and Joint Commissioner, State Tax Circle, Nagaur Ajmer Rajasthan, should be condoned in exercise of the extraordinary jurisdiction of this Hon'ble Court under Article 226 of the Constitution of India? Petitioner's Arguments: The petitioner argued that the cancellation of GST registration entails serious civil consequences, affecting the right to livelihood. They contended that the Appellate Authority's rejection of the appeal solely on limitation, without considering the explanation for the delay (including the proprietor's illness) and the grave consequences of non-condonation, was unfair and unreasonable. They relied on the judgment in Pooja Construction Company v. Union of India & Ors. for the proposition that in similar circumstances, appeals dismissed solely on limitation should be entertained on merits. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue or state respondents. However, the context implies they would have supported the orders passed by the authorities below, likely emphasizing the statutory time limits for filing appeals under Section 107 of the CGST/RGST Acts.