M/S R.H. Enterprises Gonda Thru. Its Proprietor Shubham Singh vs. State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax, Civil Sectt. Lko. And 2 Others

Held

The Court held that the impugned orders dated 04.04.2024 and 03.05.2024 were unsustainable in law. Firstly, the Court found that it was imperative for the authority to provide a copy of the DGGI letter dated 16.03.2024 to the petitioner to enable effective defense, and the failure to do so denied an adequate opportunity of hearing, thus violating the principles of natural justice. Secondly, the Court observed that the cancellation order dated 04.04.2024 began with a narration that the Assistant Commissioner had been directed by a higher authority (Additional Commissioner, Grade-1) to immediately cancel the registration. The Court reasoned that an order passed on the dictates of a superior authority, rather than an independent application of mind by the issuing officer, cannot be sustained. The Court also noted that while the show cause notice was not accompanied by the DGGI letter, the impugned order stated the petitioner did not provide clarification on DGGI's inquiry points. However, without knowing the specific inquiry points or findings, the petitioner could not be expected to provide clarification. The ratio decidendi is that administrative orders must be based on independent application of mind and must adhere strictly to the principles of natural justice, including providing all material relied upon to the affected party. The writ petition was allowed, and the impugned orders were quashed. The authorities were granted liberty to initiate fresh proceedings in accordance with law and principles of natural justice.

Facts

The petitioner, M/s R.H. Enterprises Gonda, challenged the cancellation of its GST registration by the Assistant Commissioner, State Tax, Gonda, via an order dated 04.04.2024, and the subsequent dismissal of its appeal by the Additional Commissioner, Grade-2 (Appeals), Gonda, on 03.05.2024. The cancellation stemmed from a show cause notice dated 18.03.2024, citing that the petitioner was not conducting business from its declared place of business and a DGGI report indicating the firm was non-existent. Earlier, a show cause notice dated 09.02.2024 for cancellation was dropped on 19.02.2024 after the petitioner's satisfactory reply. The petitioner argued that the fresh notice was unreasonable and that crucial documents were not provided. The DGGI report indicated the business place was a residential house, and the proprietor's father had no knowledge of commercial activities.

Key Issues

1. Whether the issuance of a fresh show cause notice for cancellation of GST registration on 18.03.2024, after proceedings initiated by a notice dated 09.02.2024 were dropped on 19.02.2024, is unreasonable, turning on the principle of fairness and procedural propriety. 2. Whether the failure to provide the petitioner with a copy of the DGGI letter dated 16.03.2024, which formed the basis of the show cause notice, violates the principles of natural justice, specifically the right to an effective hearing, as stipulated by general principles of administrative law. 3. Whether the impugned order dated 04.04.2024, cancelling the petitioner's GST registration, was passed by the Assistant Commissioner after an independent application of mind, or was it dictated by a superior authority, thereby vitiating the order, as per principles of administrative law. Petitioner's contentions: The fresh show cause notice was unreasonable as prior proceedings were dropped. The lack of supportive documents for the DGGI report rendered the notice defective. The cancellation order was passed on dictation from a superior authority, not independent application of mind. The petitioner also referred to earlier dropped proceedings and vehicle detentions as evidence of business conduct. Respondent's contentions: The petitioner has annexed a copy of the Punchanama dated 08.02.2024 prepared by DGGI officials, which records that no business was being carried out at the petitioner's place of business.