M/S Dharmadutt Brick Field , Bahraich Thru. Proprietor Mr. Dharmadutt vs. State Of U.P. Thru. Addl.Chief Secy. , State Tax Civil Secrt. U.P. Govt. Lko. And Others
Original PDF →Facts
The petitioner, M/s Dharmadutt Brick Field, engaged in towing services, filed a writ petition challenging a show cause notice dated 23.02.2023 and an order dated 17.03.2023 that cancelled its GST registration. The cancellation was based on the petitioner's failure to file GST returns for six months and its subsequent failure to submit a reply to the show cause notice within the stipulated seven working days. The petitioner claimed it did not receive the show cause notice, preventing it from filing a timely reply. The impugned order was passed by the respondent authorities.
Held
The Court held that the order dated 17.03.2023 cancelling the petitioner's GST registration was unsustainable. It reasoned that the order was passed without assigning any specific reasons for cancellation, other than the non-submission of a reply to the show cause notice. The Court found this to be in violation of the principles of natural justice and Article 14 of the Constitution of India, echoing its previous decision in Chandra Sarin (Supra). The ratio decidendi is that cancellation of GST registration cannot be based solely on the non-filing of a reply to a show cause notice without proper application of mind and an opportunity of hearing. The Court set aside the impugned order and directed the petitioner to appear before the respondent authorities within three weeks with a reply to the show cause notice, a certified copy of the High Court's order, and a copy of the Chandra Sarin judgment. The respondent authorities were directed to pass a fresh order after considering the petitioner's defense.
Key Issues
1. Whether the cancellation of GST registration based solely on the non-submission of a reply to a show cause notice, without considering the merits of the case or providing an opportunity of hearing, is legally sustainable under the GST Act? The petitioner argued that the order cancelling its GST registration was passed without affording it a proper hearing, which is a violation of natural justice. It contended that the non-submission of a reply to the show cause notice, allegedly due to non-receipt, cannot be the sole ground for such a harsh action as cancellation of registration. The petitioner relied on the High Court's own previous judgment in Writ Tax No.147 of 2022 (Chandra Sarin Vs. Union of India), which held that an order cancelling registration without assigning reasons and solely on the ground of non-reply is unsustainable and violates Article 14 of the Constitution of India. The respondent (State of U.P.) did not record any specific arguments in the judgment.
Sections Cited
Section 14, Article 14
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2024:AHC-LKO:9887-DB Court No. - 2 Case :- WRIT TAX No. - 19 of 2024 Petitioner :- M/S Dharmadutt Brick Field , Bahraich Thru. Proprietor Mr. Dharmadutt Respondent :- State Of U.P. Thru. Addl.Chief Secy. , State Tax Civil Secrt. U.P. Govt. Lko. And Others Counsel for Petitioner :- Ashish Kumar Singh,Shakeel Qureshi Counsel for Respondent :- C.S.C. Hon'ble Vivek Chaudhary,J. Hon'ble Om Prakash Shukla,J. Heard learned counsel for the petitioner and the Sri Sanjay Sareen, learned Standing Counsel for the State. Present petition has been filed for quashing of show cause notice dated 23.02.2023 and order dated 17.03.2023 whereby G.S.T. registration of petitioner has been cancelled. Petitioner further prayed that respondents may be directed to revoke the G.S.T. registration of petitioner. The facts, in brief, are that the petitioner is an individual proprietorship concerned and engaged in the business of providing services in relation to towing of commercial and private vehicles and is registered under GST Act. It appears that the GST return was not filed by the petitioner and thereafter a show cause notice dated 23.02.2023 was issued on the ground of non-filing of the reply to the show cause notice is not given. The non-submission of reply to the show cause cannot be a ground for cancellation of the registration. The relevant Paragraphs 8 and 9, of the judgment in Chandra Sarin (Supra), read as under:- "
In the present case from the perusal of the order dated 13.02.2020, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 13.02.2020 (Annexure - 2) is set aside. The petition is accordingly allowed.
It is, however, directed that the petitioner shall file reply to the show- cause notice within a period of three weeks from today. The Adjudicating Authority i.e. Assistant Commissioner, Lucknow shall proceed to pass fresh order after giving an opportunity of hearing to the petitioner and after considering whatever defence he may take." In view thereof, the present petitioner is also entitled for the same relief. The benefit of the order dated 22.9.2022 passed in Writ Tax No.147 of 2022, shall also be made available to the present petitioner. Accordingly, the present petition is allowed. The orders dated 17.03.2023 is set aside and the petitioner is permitted to appear before the respondent along with the reply to show cause notice and the certified copy of this order as well as the copy of the judgment passed in Chandra Sarin (Supra) dated 22.09.2022, within three weeks from today. In case, the petitioner appears along with the reply and the certified copy of this order, the respondents shall proceed to pass a fresh order in accordance with law. Order Date :- 2.2.2024 Arti/- [Om Prakash Shukla,J.] [Vivek Chaudhary,J.] ARTI MAURYA High Court of Judicature at Allahabad, Lucknow Bench
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.