GST registration cancelled for alleged six-month return non-filing-unreasoned order challenged; cancellation set aside under Article 14 non-arbitrariness

Cancellation of GST registration for alleged non-filing of returns for six continuous months was challenged on the ground that the cancellation order lacked reasons and reflected non-application of mind. The HC held that the impugned order did not disclose any rationale justifying such a harsh consequence and, being unreasoned, failed the constitutional requirement of non-arbitrariness under Article 14. The cancellation order was set aside and the writ petition was allowed.

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Issues:
Challenge to cancellation of registration under GST Act due to non-filing of returns, Appeal dismissal for delay condonation, Compliance with principles of natural justice in cancellation order.

Analysis:
1. Cancellation of Registration: The petitioner, a proprietorship concern registered under the GST Act, challenged the cancellation of registration due to non-filing of returns. The cancellation order dated 13.02.2020 lacked reasoning and application of mind, violating principles of natural justice. The petitioner argued that the cancellation adversely affected their right to conduct business, invoking constitutional guarantees under Article 19 and Article 14. The High Court set aside the cancellation order, emphasizing the necessity for reasons in administrative or quasi-judicial decisions, as established in precedents like Whirlpool Corporation v. Registrar of Trademarks.

2. Dismissal of Appeal: The petitioner's appeal against the cancellation order was dismissed by the Appellate Authority due to delay beyond the prescribed period, citing Section 107(4) of the GST Act. The petitioner contended that the delay was due to unforeseen circumstances, including illness and the COVID-19 situation. While acknowledging the lack of power to condone the delay under the statutory scheme, the Court held that the dismissal of the appeal did not preclude challenging the cancellation order itself, as the latter lacked justification and application of mind.

3. Compliance with Principles of Natural Justice: The Court emphasized the importance of providing reasons in administrative or quasi-judicial orders, as reiterated in the judgment of Om Prakash Mishra v. State of U.P. The lack of reasoning in the cancellation order dated 13.02.2020 led to its set aside, highlighting the need for adherence to Article 14 of the Constitution of India. The Court directed the petitioner to respond to the show-cause notice within three weeks, with the Adjudicating Authority instructed to issue a fresh order after affording the petitioner a hearing and considering their defense.

4. Future Compliance: With the cancellation order set aside, the Court directed that further actions be taken in accordance with the law prescribed under Section 29 of the GST Act. This decision ensures that the petitioner's rights are protected, and due process is followed in any subsequent proceedings related to the registration cancellation issue.

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