M/S Unitedsky Beverages Thru. Proprietor Mr. Vinod Kumar Chauhan vs. State Of U.P. Thru. Addl. Chief Secy. State Tax U.P. Lko. And 2 Others

Held

The Court held that the order dated October 22, 2020, was liable to be set aside. The reasoning was based on the clear contradiction within the order itself, which stated that a reply was filed by the petitioner on the same date the order was passed, but then proceeded to state that no reply had been submitted. This inconsistency demonstrated a lack of application of mind by the adjudicating authority. The Court found this situation analogous to the facts in Surendra Bahadur Singh's case, where a non-reasoned order was set aside. The ratio decidendi is that a quasi-judicial order, particularly one with adverse consequences like cancellation of registration, must be reasoned and demonstrate application of mind; a contradictory or non-reasoned order is unsustainable. The Court quashed the order dated October 22, 2020, and directed the petitioner to file a reply to the show cause notice within three weeks. The adjudicating authority was directed to proceed de novo, grant an opportunity of hearing, and pass a fresh order.

Facts

The petitioner, M/S Unitedsky Beverages, filed a writ petition challenging an order dated April 8, 2022, for cancellation of registration and an earlier order dated October 22, 2020, passed by the Assistant Commissioner, Sale Tax, Lucknow Sector 12. The petitioner argued that the order dated October 22, 2020, was passed without application of mind. This contention was based on a contradictory statement within the order itself, which first acknowledged a reply filed by the petitioner on October 22, 2020, and then stated that no reply was submitted. The petitioner relied on previous judgments of the High Court that emphasized the necessity of reasoned orders in quasi-judicial proceedings.

Key Issues

1. Whether the order dated October 22, 2020, for cancellation of registration under Section 29(2)(c) of the Goods and Services Tax Act, 2017, is liable to be set aside for being passed without application of mind, as evidenced by contradictory statements within the order? The petitioner argued that the order cancelling registration was passed without any application of mind, citing a direct contradiction in the order which stated both that a reply was filed and that no reply was submitted. The petitioner relied on the Division Bench judgment in Surendra Bahadur Singh v. State of U.P. and others, which held that a quasi-judicial order must disclose application of mind and reasons, and that an order without reasons violates Article 14 of the Constitution. They also cited Om Prakash Mishra v. State of U.P. & Ors. and M/s Namo Narayan Singh v. State of U.P. and others, emphasizing that reasons are the heart and soul of judicial and administrative orders. The respondent (State) did not record any specific arguments in the judgment.