M/S Parwati Constructions Thru. Its Proprietor Mr. Naresh Chandra Verma vs. Addl. Commissioner Grade 2 (Appeal) State Tax Sitapur And Another
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The petitioner, M/s Parwati Constructions, challenged an order dated December 27, 2022, passed by the Additional Commissioner Grade 2 (Appeal), State Tax, Sitapur. This appellate order dismissed the petitioner's appeal against the cancellation of its GST registration and directed the revocation of the registration. The petitioner, engaged in civil work contracts, had its GST registration cancelled by an order dated July 1, 2022, after a show cause notice was issued on June 15, 2022. The petitioner claims it did not receive the show cause notice and therefore could not file a reply within the stipulated seven working days. The appeal against the cancellation order was dismissed by the appellate authority solely on the ground of delay.
Held
The Court allowed the petition, setting aside both the cancellation order dated July 1, 2022, and the appellate order dated December 27, 2022. The Court followed its own precedent in Writ Tax No. 145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others), wherein it was held that an order of cancellation of registration passed solely on the ground of non-submission of a reply to a show cause notice, without assigning any other reason or application of mind, does not stand the test of scrutiny. The Court reasoned that the non-submission of a reply cannot be the sole basis for cancellation. The petitioner was permitted to appear before the respondent authority within three weeks with a reply to the show cause notice and a certified copy of the present order and the Technosum India judgment. The respondent authority was directed to pass a fresh order in accordance with law after considering the petitioner's reply.
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, is legally sustainable, particularly when the petitioner claims non-receipt of the notice? (Question of law) Petitioner's contention: The petitioner argued that the order dated July 1, 2022, cancelling registration was passed without hearing the petitioner. They relied on this Court's judgment in Writ Tax No. 145 of 2022 (Technosum India Pvt. Ltd. Lucknow Vs. Union of India and others) dated September 26, 2022. The petitioner asserted that the non-submission of a reply to a show cause notice cannot be the sole ground for cancellation and that the appellate order dismissing the appeal on grounds of delay, without addressing the merits of the cancellation, is also unsustainable. They sought the benefit of the Technosum India Pvt. Ltd. judgment. Respondent's contention: The learned Standing Counsel for the State did not record any specific arguments in the judgment.
Sections Cited
Section 29
AI-generated summary — verify with the full judgment below
Court No. - 4 Case :- WRIT TAX No. - 10 of 2023 Petitioner :- M/S Parwati Constructions Thru. Its Proprietor Mr. Naresh Chandra Verma Respondent :- Addl. Commissioner Grade 2 (Appeal) State Tax Sitapur And Another Counsel for Petitioner :- Jitendra Pratap Singh,Gaurav Singh,Shailesh Sachan Counsel for Respondent :- C.S.C. Hon'ble Vivek Chaudhary,J. non-submission of reply to the show cause cannot be a ground for cancellation of the registration. The relevant Paragraphs 9 and 10, of the judgment in Technosum India Pvt. Ltd. Lucknow (Supra), read as under:- "
The Counsel for the petitioner argues that the appeal has been dismissed as being beyond limitation as such the doctrine of merger would not apply and the petitioner is fair entitled to seek judicial review of the order dated 03.01.2022 on the ground that the same is non speaking order. This Court while deciding Writ Tax No.147 of 2022 (M/S Chandrasen, Sarda Nagar, Lucknow vs Union of India and others) had held that the order of cancellation of registration or any other order passed either on administrative or on judicial side is without any reason and prima facie, without application of mind, the same does not stand the test of scrutiny under Article 14 of the Constitution of India.
Thus, following the said judgment rendered in the case of M/s Chandrasen (Supra), the writ petition deserves to be allowed." Order Date :- 16.1.2023 Arjun/- ARJUN PRASAD 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.