Suman Singh vs. State Of Up And 2 Others
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The petitioner, Suman Singh, a proprietorship firm engaged in the brick kiln business and registered under the GST Act, challenged two orders: one dated 10.08.2022 by the Commercial Tax Officer, Ballia Sector-4, cancelling its registration, and another dated 31.01.2024 by the Additional Commissioner Grade-II, Appeal-III Commercial Tax, Varanasi, rejecting its appeal. The cancellation was based on the ground that the petitioner, a composition taxpayer, had not filed returns for three consecutive tax periods. The petitioner contended that it had filed all its returns on the GST portal, but the authorities cancelled the registration without verifying this. The appeal was dismissed on grounds of laches without detailed reasoning. The petitioner argued that since it adopted the composition scheme and paid all its taxes, its registration could not be cancelled.
Held
The Court held that the impugned orders could not be sustained in the eyes of law and were liable to be quashed. Regarding the first issue, the Court noted that the petitioner had adopted the composition scheme and paid all due taxes, making it incumbent upon the respondent authorities to verify this. The Court found that the cancellation order itself contained contradictory statements, indicating a lack of application of mind. The Court relied on Division Bench judgments in M/S Mahadevi Construction and Surendra Bahadur Singh, which held that cancelling registration without receiving a response clearly reflects non-application of mind. Regarding the second issue, the Court observed that the appeal was dismissed without assigning proper reasons, necessitating reconsideration. Consequently, the Court quashed the impugned orders and remanded the matter to the concerned authority for fresh decision, requiring a reasoned and speaking order after hearing all stakeholders within two months.
Key Issues
1. Whether the cancellation of registration under the GST Act is valid when the petitioner claims to have filed all its returns and paid applicable taxes under the composition scheme? (Section 29 of the CGST Act, 2017 and relevant Rules). The petitioner argued that the cancellation was arbitrary and passed without application of mind, as all returns were filed and taxes paid under the composition scheme, making cancellation unjustified. The petitioner relied on judgments like Surendra Bahadur Singh, M/s Mahadevi Construction, M/S National Traders, and New Shanti Restaurant. The respondent State supported the impugned orders. 2. Whether the appellate authority's dismissal of the appeal on grounds of laches without assigning detailed reasons is sustainable? The petitioner argued that the dismissal was erroneous and required reconsideration. The respondent State supported the impugned orders.
Sections Cited
Section 29
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:32110 Court No. - 2 Case :- WRIT TAX No. - 1862 of 2024 Petitioner :- Suman Singh Respondent :- State Of Up And 2 Others Counsel for Petitioner :- Nagendra Krishna,Pravin Kumar Tiwari Counsel for Respondent :- C.S.C. Hon'ble Piyush Agrawal,J.
Heard learned counsel for the petitioner and Sri R.S. Pandey, learned Additional Chief Standing Counsel for the State-respondents.
By means of instant writ petition, the petitioner has assailed the order dated 10.08.2022 passed by the Commercial Tax Officer, Ballia Sector-4 as well as the order dated 31.01.2024 passed by the Additional Commissioner Grade-II, Appeal- III Commercial Tax, Varanasi.
Learned counsel for the petitioner submits that the petitioner is a duly registered proprietorship firm under the GST Act, which is engaged in the business of brick kiln. To the utter surprise, petitioner was served with a show cause notice dated 29.07.2022 for cancellation of its registration, stating that the composition tax payer has not filed returns for three consecutive tax period, however, the petitioner filed all his returns on the GST Portal, but the authority concerned cancelled the registration, without checking the returns so uploaded on the portal. Feeling aggrieved by the said order, petitioner filed an appeal, which was rejected on the ground of laches without assigning any detailed reason. Hence, the writ petition.
He further submits that without application of mind, the registration of the petitioner has been cancelled by the impugned order on the ground that the petitioner has not filed returns for three consecutive tax period, however, the petitioner had brought on record the material to show that all returns were filed.
He further submits that the petitioner adopted the composition scheme and paid all its taxes; meaning thereby, no tax was due upon it and once the said fact was available on record before the authorities, the registration of the petitioner cannot be cancelled.
In support of his submission, he has placed reliance upon the judgment of Division Bench of this Court passed in the case of Surendra Bahadur Singh Vs. State of U.P., 2023 (77) G.S.T.L. 331 (All.) and M/s Mahadevi Construction Vs. State of U.P. and Another (Writ Tax No 673 of 2025) as well as judgments of Single Bench passed in the cases of M/S National Traders and Another Vs. State
The issue in hand is no longer res-integra in view of the aforesaid judgments relied upon by the counsel for the petitioner.
The record shows that the petitioner had adopted composition scheme and paid all due taxes and therefore, it was incumbent upon the respondent authorities to verify/check the same.
The first two lines of the cancellation order states respectively as 'This has reference to your reply dated 07.08.2022 in response to the notice to show cause dated 29.07.2022 whereas no reply to notice to show cause has been submitted; which itself show that order has been passed without any application of mind.
The Division Bench of this Court in the case of M/S Mahadevi Construction Singh (supra) has specifically held that in case no response receives, to cancel the registration on non-receipt of any response clearly reflects non-application of mind by the officer for passing the order impugned.
The similar view has been expressed by the Division Bench of this Court in the case of Surendra Bahadur Singh (supra).
In view of the facts as stated above that the appeal has been dismissed without assigning any proper reason, the matter requires re-consideration.
Accordingly, the impugned orders cannot be sustained in the eyes of law and the same are hereby quashed.
The writ petition is allowed. The matter is remanded to the authority concerned for deciding afresh by passing a reasoned and speaking order, after hearing all the stakeholder, within a period of two months from the date of production of certified copy of this order. Order Date :- 6.3.2025 Pravesh Mishra PRAVESH KUMAR MISHRA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.