M/S Purna Trading Company vs. State Of U.P. And 2 Others

Held

The Court held that the impugned orders were unsustainable in law. It was observed that the order of cancellation of GST registration and the rejection of the revocation application were passed without assigning any cogent reasons. Similarly, the appellate authority dismissed the appeal summarily without providing any reasons. The Court emphasized that reasons are essential for transparency and fairness in decision-making and that their absence violates the principles of natural justice. Citing its own previous judgments, the Court stated that providing reasons is mandatory for orders passed by authorities. While setting aside the impugned orders, the Court noted that the petitioner had not submitted a reply nor appeared before the authorities, despite multiple opportunities before the appellate authority. Therefore, the Court imposed a cost of Rs. 20,000/- on the petitioner. The matter was remitted back to the first appellate authority to pass a fresh reasoned and speaking order after affording reasonable opportunities of hearing to the parties, preferably within two months.

Facts

M/s Purna Trading Company, a proprietorship firm engaged in retail and wholesale business, filed a writ petition challenging orders dated 20.11.2020/7.12.2020 and 21.1.2021 passed by respondent no. 3 and 5, and an order dated 17.11.2021 passed by respondent no. 2. The petitioner claimed to have deposited all due tax liabilities on time. Following a survey on 9.11.2020, a notice under Section 29(2) of the UPGST Act was issued. The petitioner's request for adjournment was allegedly ignored, leading to an ex parte cancellation of its GST registration. A subsequent revocation application was also rejected, and an appeal against this rejection was dismissed without assigning reasons. The petitioner argued that these orders were passed without proper justification.

Key Issues

1. Whether the cancellation of the petitioner's GST registration by respondent no. 3 and 5, and the rejection of its revocation application by respondent no. 5, were validly passed without assigning cogent reasons, thereby violating principles of natural justice, as per Section 29 of the UPGST Act? 2. Whether the dismissal of the petitioner's appeal by respondent no. 2 on 17.11.2021 was legally sustainable without providing any reasons, thus rendering it unsustainable in law? Petitioner's Contentions: The petitioner argued that the GST registration was cancelled ex parte without considering its adjournment application and that subsequent orders rejecting the revocation application and appeal were passed without assigning any reasons. Reliance was placed on this Court's judgments in M/s Shyam Sundar Sita Ram Vs. State of UP and others and M/s Gaurav Trading Company Vs. State of U.P. and others. Respondent's Contentions: The State argued that the registration was cancelled because the petitioner failed to submit a reply or material after receiving the notice, and the revocation application was rightly rejected. It was also contended that the petitioner failed to appear before the appellate authority on four dates, and as per Section 107(9) of the Act, only three adjournments are permissible, justifying the ex parte order.