Tax Registration Cancellation Overturned: Administrative Order Lacks Reasoned Decision, Violates Constitutional Principles of Fair Hearing

The HC quashed tax registration cancellation orders due to lack of reasoned decision. The court found the administrative order deficient in applying judicial mind, violating constitutional principles. The petitioner was directed to respond to the show-cause notice, and the tax authority was instructed to conduct a fresh hearing and pass a reasoned order providing proper opportunity of being heard.

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Issues involved:
The issues involved in the judgment are the cancellation of registration under the Uttar Pradesh Goods and Services Tax Act, 2017, lack of application of mind in passing the order, absence of reasons in the order, and the requirement for providing reasons in judicial proceedings.

Cancellation of Registration:
The petitioner challenged the order for cancellation of registration dated March 15, 2023, and the subsequent order passed in appeal under Section 107 of the Act. The petitioner argued that the cancellation was done without proper application of mind, as evident from the discrepancy between the reply filed and the reason cited for cancellation. The Court referred to previous judgments emphasizing the need for reasons in administrative or quasi-judicial orders. It was held that the order lacked reasoning and did not comply with the constitutional mandates, leading to the setting aside of the impugned orders. The petitioner was directed to file a reply to the show-cause notice, and the adjudicating authority was instructed to pass a fresh order after providing an opportunity for a hearing.

Lack of Application of Mind and Absence of Reasons:
The judgment highlighted the importance of providing reasons in judicial proceedings, citing previous cases where non-reasoned orders were set aside. The Court noted that the order for cancellation of registration lacked any reason for such a drastic action. It was concluded that the order did not meet the requirements of Article 14 of the Constitution of India due to the absence of proper application of mind. As a result, the impugned orders were quashed, and the petitioner was granted the opportunity to respond to the show cause notice, with directions for the adjudicating authority to conduct a fresh hearing and pass a new order.

Requirement for Providing Reasons in Judicial Proceedings:
The judgment emphasized the necessity of providing reasons in judicial proceedings, as seen in previous cases where non-reasoned orders were challenged and set aside. The Court referred to a coordinate Bench judgment to underscore the significance of including reasons in orders. It was observed that the lack of reasons in the impugned orders led to their setting aside. The petitioner was directed to file a reply to the show cause notice, and the adjudicating authority was instructed to conduct a fresh hearing and issue a new order, ensuring compliance with the principles of natural justice and due process.

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