M/S Deepak Singh Contractor And General Order Supplier vs. State Of Up And 2 Others

Facts

The petitioner, M/s Deepak Singh Contractor And General Order Supplier, a registered dealer, received a show cause notice via email on January 2, 2023, for cancellation of its GST registration under the UPGST Act. The registration was suspended immediately. The petitioner alleges that the cancellation order dated January 23, 2023, was passed without specifying a date and time for personal hearing. The petitioner claims to have been unaware of the order due to illness, leading to the expiry of the time for filing a revocation application. Upon learning of the order, an appeal was filed, which was rejected without considering the grounds raised. The petitioner argues that the cancellation order was passed without application of mind, citing a contradiction within the order itself: one line states a reply was filed, while another states no reply was submitted. The First Appellate Authority's order dated July 10, 2024, is also under challenge.

Held

The Court held that the impugned order dated January 23, 2023, cancelling the petitioner's GST registration, and the subsequent order dated July 10, 2024, passed by the First Appellate Authority, were unsustainable in law. The primary reasoning was based on the observation that the cancellation order itself contained contradictory statements regarding the submission of a reply to the show cause notice. The first line of the order referred to a reply dated January 11, 2023, while the second line stated that no reply had been submitted. This contradiction, the Court found, clearly indicated a lack of application of mind by the issuing authority. The Court relied heavily on its previous judgments, particularly Surendra Bahadur Vs. State of U.P. and others (Writ Tax No.172 of 2023), where a similar issue of a non-reasoned and contradictory order led to its quashing. The ratio decidendi is that quasi-judicial orders, especially those with adverse consequences like cancellation of registration, must be reasoned and demonstrate application of mind to the facts and submissions, aligning with constitutional principles of fairness and Article 14. Consequently, the Court quashed the impugned orders and allowed the writ petition. The matter was remanded to the authority concerned for a de novo decision after affording an opportunity of hearing to the petitioner. Any amount deposited by the petitioner pursuant to the impugned orders was directed to be refunded.

Key Issues

1. Whether the order cancelling the petitioner's GST registration dated January 23, 2023, passed by respondent no. 3, is liable to be quashed for being passed without application of mind and without affording a proper opportunity of hearing, as contemplated under Section 29 of the U.P. Goods and Services Tax, 2017? Petitioner's Contention: The petitioner argued that the cancellation order was passed arbitrarily and without application of mind, evidenced by the contradictory statements within the order itself regarding the submission of a reply. They also contended that no specific date or time for personal hearing was provided in the show cause notice, and the subsequent appeal was rejected without considering the merits. Reliance was placed on judgments of this Court in Writ Tax No. 759 of 2024 (Virpratap Vs. State of Up and 2 others) and Writ Tax No.367 of 2021 (Kashish Infra Energy Power Azadpur Vs. State of U.P. and 2 others), and specifically on the reasoning in Surendra Bahadur Vs. State of U.P. and others (Writ Tax No.172 of 2023) and M/s Namo Narayan Singh v. State of U.P. and others (Writ Tax No.1476 of 2022) which emphasize the necessity of providing reasons in orders. Respondent's Contention: The learned Additional Chief Standing Counsel supported the impugned orders.