M/S Meerarch Construction, Thru. Pro. Ms Archana Singh vs. Union Of INDIA Thru. Secy. Ministry Of Finance North Block And 3 Others

Facts

The petitioner, M/s Meerarch Construction, a sole proprietorship engaged in civil work contracts, challenges the cancellation of its GST registration. The cancellation order, dated 02.06.2021, was passed after a show cause notice was allegedly not received by the petitioner. Consequently, the petitioner could not file a reply within the stipulated seven working days. An appeal filed against the cancellation order was dismissed on 04.01.2023, primarily on grounds of delay. The petitioner contends that the order of cancellation was passed without affording an opportunity of being heard and relies on a previous High Court judgment in a similar case.

Held

The Court allowed the writ petition, setting aside both the order dated 02.06.2021 cancelling the petitioner's GST registration and the appellate order dated 04.01.2023 dismissing the appeal. The Court reasoned that the order of cancellation, similar to the one in the cited case of Technosum India Pvt. Ltd., was passed without assigning any specific reasons and was based solely on the non-submission of a reply to the show cause notice. The Court reiterated its previous finding that non-submission of a reply cannot be the sole ground for cancellation of registration and that such orders, lacking application of mind and reasons, do not withstand scrutiny under Article 14 of the Constitution. The ratio decidendi is that orders cancelling GST registration must be speaking orders, providing reasons and demonstrating application of mind, and that non-receipt of a show cause notice can be a valid ground for challenging the subsequent cancellation and the dismissal of an appeal on delay. The Court directed the petitioner to appear before the respondent with the reply to the show cause notice and the certified copies of the High Court's order and the Technosum India judgment within three weeks. The respondent is to pass a fresh order in accordance with law upon the petitioner's appearance.

Key Issues

1. Whether the order cancelling the GST registration of the petitioner, dated 02.06.2021, is liable to be set aside for being non-speaking and passed without proper application of mind, contrary to the principles of natural justice, particularly in light of the petitioner not receiving the show cause notice? 2. Whether the appellate order dated 04.01.2023, dismissing the petitioner's appeal on grounds of delay, is sustainable when the delay was occasioned by the petitioner's alleged non-receipt of the show cause notice leading to the initial cancellation order? Petitioner's arguments: The petitioner argues that the order dated 02.06.2021 is non-speaking, as it does not assign any reasons for cancellation beyond the non-submission of a reply to the show cause notice. They contend that non-submission of a reply cannot be the sole ground for cancellation. The petitioner relies on the High Court's decision in Writ Tax No. 145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others) which held that non-speaking orders are not sustainable under Article 14 of the Constitution. They also argue that the dismissal of the appeal on delay should be reconsidered given the circumstances of the initial order. Respondent's arguments: The judgment records no specific arguments from the respondent's counsel regarding the merits of the cancellation or the dismissal of the appeal, other than their appearance.