GST Registration Cancellation Order Overturned: Authority Must Provide Reasoned Decision and Fair Hearing Opportunity

HC set aside GST registration cancellation order due to lack of reasoned decision and procedural fairness. While upholding appeal dismissal for delay, the court directed the tax authority to issue a fresh show-cause notice, allowing the petitioner three weeks to respond and ensuring compliance with constitutional principles of natural justice and reasonable opportunity.

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Issues Involved:
Challenge to cancellation of registration under GST Act and dismissal of appeal on grounds of delay condonation application.

Cancellation of Registration:
The petitioner, a proprietorship concern engaged in civil contractual works, challenged the cancellation of registration under the GST Act due to non-filing of returns. The petitioner claimed lack of knowledge of the show-cause notice due to COVID-19, resulting in the cancellation order dated 07.01.2023. The cancellation order lacked reasons and was deemed to be without application of mind, violating the petitioner's right to run a business under Article 19 of the Constitution of India. The petitioner argued that the order was against the mandate of Article 14. Citing the case of Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Ors., it was contended that the order could be challenged as it lacked reasons, as per the judgment in Om Prakash Mishra v. State of U.P. & Ors. The High Court set aside the cancellation order dated 07.01.2023, directing the petitioner to file a reply to the show-cause notice within three weeks for a fresh order by the Adjudicating Authority.

Dismissal of Appeal:
The petitioner's appeal against the cancellation order was dismissed by the Appellate Authority due to a delay, citing Section 107 of the GST Act that does not provide for condonation of delay. The petitioner argued that the dismissal was justified under the Act but contended that the cancellation order lacked application of mind. The High Court held that the appeal dismissal was valid as per the statutory scheme of the Act, but the cancellation order was set aside for lacking reasons and violating constitutional rights. The Department was directed to proceed in accordance with the law following the setting aside of the cancellation order.

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