M/S Siddha Mahajan Private Limited Balrampur Thru. Proprietor Rakesh Kumar Singh vs. State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax U.P. Lko. And 2 Others

Held

The Court held that both the cancellation order and the appellate order were unsustainable in law. The cancellation order dated 18.03.2024 was flawed because it was based on a cryptic show cause notice that did not detail any inspection findings, and the order itself merely cited Rule 21(a) without adequately considering the petitioner's explanation. The Court emphasized that orders with adverse civil consequences must be supported by valid reasons. The appellate order dated 03.05.2024 was also found to be unsustainable as it dismissed the appeal on a procedural technicality (non-submission of an appeal memo) without addressing the substantive issues raised by the petitioner regarding the validity of the cancellation order. The Court reasoned that the appellate authority should have applied the same standard of scrutiny to the cancellation order as it expected from the petitioner regarding the appeal memo. The ratio decidendi is that GST registration cancellation orders and their appellate affirmations must be reasoned, non-cryptic, and consider the assessee's submissions to comply with principles of natural justice and statutory requirements.

Facts

M/s Siddha Mahajan Private Limited (the petitioner) challenges the cancellation of its GST registration by the Assistant Commissioner, State Tax, Balrampur, on 18.03.2024, and the subsequent dismissal of its appeal by the Additional Commissioner, State Tax, Gonda, on 03.05.2024. The petitioner was incorporated in February 2022 and registered under GST in March 2022. A show cause notice dated 22.02.2024 alleged violations of Rule 21(b) (issuing invoices without supply) and Rule 21(a) (not conducting business from the declared place of business). The petitioner replied on 26.02.2024, stating it deals in scrap material and requested a re-visit. The cancellation order cited only Rule 21(a) and was made effective retrospectively from 01.02.2024. The appellate authority dismissed the appeal for non-submission of an appeal memo and deemed submitted photographs as managed.

Key Issues

1. Whether the order cancelling the petitioner's GST registration, dated 18.03.2024, passed by the Assistant Commissioner, State Tax, Sector-2, Balrampur, is valid in law, particularly concerning the alleged violation of Rule 21(a) of the CGST/SGST Rules. 2. Whether the appellate order dated 03.05.2024, passed by the Additional Commissioner, Grade II (Appeal), State Tax, Gonda, which dismissed the petitioner's appeal, is sustainable in law. Petitioner's arguments: The show cause notice was cryptic, failing to mention any inspection or findings. The cancellation order did not consider the petitioner's reply and lacked valid reasons, violating principles of natural justice as it entails adverse civil consequences. The appellate authority erred by dismissing the appeal on procedural grounds without addressing the merits of the cancellation order. Revenue's arguments: The judgment records no specific arguments for the respondent State.