M/S Dashmesh Infratech Private Limited, Thru. Its Director Meeta Singh vs. Union Of INDIA Thru. Secy. Ministry Of Finance And 5 Others

Facts

The petitioner, M/s Dashmesh Infratech Private Limited, a civil work contractor registered under GST, challenges an order dated July 31, 2021, cancelling its registration. The cancellation was based on the non-filing of GST returns. The petitioner claims it did not receive the show cause notice. An appeal against the cancellation order was dismissed on January 31, 2023, by the appellate authority due to delay. The petitioner argues that the cancellation order was passed without hearing them and relies on a previous High Court judgment, Writ Tax No. 145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others), which held that non-submission of a reply to a show cause notice cannot be the sole ground for cancellation of registration.

Held

The Court allowed the writ petition. It held that the order dated July 31, 2021, cancelling the petitioner's GST registration, and the appellate order dated January 31, 2023, dismissing the appeal, were liable to be set aside. The Court reasoned that the cancellation order was passed without the petitioner being heard, which violates principles of natural justice. It relied on its previous decision in Writ Tax No. 145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others), which established that the non-submission of a reply to a show cause notice cannot be the sole ground for cancellation of registration and that orders lacking reasons are not sustainable. The ratio decidendi is that a GST registration cannot be cancelled without a proper hearing and application of mind, especially when the petitioner claims non-receipt of the show cause notice. The Court directed that the petitioner be permitted 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 respondents are to pass a fresh order in accordance with law thereafter. No issue was expressly left undecided.

Key Issues

1. Whether the order cancelling the petitioner's GST registration dated July 31, 2021, is liable to be set aside for being passed without providing a reasonable opportunity of being heard, contrary to principles of natural justice and Section 29(2) of the CGST Act, 2017? 2. Whether the appellate order dated January 31, 2023, which dismissed the petitioner's appeal on grounds of delay, is sustainable when the primary order of cancellation was allegedly passed without proper notice? Petitioner's arguments: The petitioner contends that the order cancelling its registration was passed without affording it an opportunity to be heard, as it claims not to have received the show cause notice. It relies on the judgment in Writ Tax No. 145 of 2022, which held that non-submission of a reply to a show cause notice cannot be the sole ground for cancellation of registration and that such orders, if non-speaking, do not stand scrutiny under Article 14 of the Constitution. The petitioner seeks the benefit of this precedent. Respondent's arguments: The judgment records no specific arguments from the respondents. It notes that learned counsel for respondent no.2 and learned Standing Counsel for the State were heard.