M/S Chandra Sain,Sharda Nagar, Lucknow Thru. Its Proprietor Mr. Chandra Sain vs. U.O.I. Thru. Secy. Ministry Of Finance,New Delhi And 5 Others

Held

The Court held that the order cancelling the petitioner's GST registration dated 13.02.2020 was indeed passed without any application of mind, as it did not ascribe any reasons for taking such a harsh action. The Court found that the order failed to satisfy the test of Article 14 of the Constitution of India. Consequently, the impugned order dated 13.02.2020 was set aside. The Court also noted that as the appeal was dismissed on the ground of limitation, the doctrine of merger would not apply to the initial cancellation order. The Court directed the petitioner to file a reply to the show-cause notice within three weeks. The Adjudicating Authority, the Assistant Commissioner, Lucknow, was directed to pass a fresh order after providing an opportunity of hearing to the petitioner and considering their defense. The Court also stated that further action would prevail in accordance with Section 29 of the GST Act. No issue was expressly left undecided.

Facts

The petitioner, M/s Chandra Sain, a proprietorship concern engaged in civil contractual works, had its GST registration cancelled by an order dated 13.02.2020. This cancellation was based on a show-cause notice dated 04.02.2020, citing non-filing of GST returns for a continuous period of six months. The petitioner claims they were unaware of the show-cause notice as the registered email address belonged to their accountant, thus preventing a timely reply. Consequently, the cancellation order was passed. The petitioner's subsequent appeal was dismissed by the Appellate Authority on 06.09.2022 as being time-barred, citing the bar under Section 107(4) of the GST Act, which the authority believed did not permit condonation of delay.

Key Issues

1. Whether the order cancelling the petitioner's GST registration dated 13.02.2020 was passed without due application of mind, thereby violating Article 14 of the Constitution of India. 2. Whether the doctrine of merger applies when an appeal is dismissed on the ground of limitation, rather than on merits. Petitioner's Arguments: The petitioner argued that while the Appellate Authority correctly dismissed the appeal due to the limitation bar under Section 107(4) of the GST Act, the initial cancellation order dated 13.02.2020 was passed without any application of mind. They contended that this quasi-judicial order, adversely affecting their constitutional right to conduct business under Article 19, was issued without considering the merits, thus failing to comply with Article 14. They further argued that since the appeal was not decided on merits, the doctrine of merger would not apply, and the original order, being devoid of reasons, could be challenged directly before the High Court, citing Whirlpool Corporation v. Registrar of Trademarks, Mumbai. They also relied on this Court's judgment in Om Prakash Mishra v. State of U.P. & Ors. for the principle that all judicial and administrative orders must provide reasons. Respondent's Arguments: The judgment records no specific arguments from the respondents regarding the application of mind in the cancellation order or the applicability of the doctrine of merger.