GST registration cancellation order quashed for violating natural justice principles and failing Article 14 requirements

The Allahabad HC quashed the GST registration cancellation order passed by tax authorities against the petitioner. The court found that no reasons were assigned in the impugned order and no opportunity of hearing was provided to the petitioner, violating principles of natural justice. Relying on precedent in Surendra Bahadur Singh case, the court held the order failed to satisfy Article 14 requirements as it was passed without application of mind. The writ petition was allowed and the cancellation order was set aside.

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Issues:
Challenge to cancellation of GST registration without opportunity of hearing and application of mind.

Analysis:
The petitioner, engaged in construction business, challenged the cancellation of GST registration by respondent no. 4 without a hearing. The petitioner argued that the cancellation order was passed in violation of principles of natural justice as no opportunity of hearing was provided. The petitioner also contended that the order was passed without proper application of mind. The petitioner cited previous judgments to support the argument, emphasizing the need for reasons and application of mind in such decisions.

The impugned order of cancellation dated 1.6.2023 was found to lack any reasons for the cancellation. The Court referred to previous judgments, including the case of Surendra Bahadur Singh, where it was held that cancellation orders without reasons or application of mind are against the principles of natural justice and constitutional rights. The Court emphasized the importance of reasons in administrative and quasi-judicial orders. Based on the precedents, the Court set aside the impugned order and directed the petitioner to file a reply to the show-cause notice and granted an opportunity of hearing before passing a fresh order.

The Court also referred to the case of S.S. Traders, where the denial of an opportunity of hearing before cancelling registration was deemed to vitiate the proceedings and orders. Following the legal principles established in previous cases, the Court quashed the impugned orders in the present case. The writ petition was allowed, directing the petitioner to file a reply to the show-cause notice within a specified timeline. The adjudicating authority was instructed to proceed de novo and issue a reasoned order after providing the petitioner with a fair opportunity of hearing.

In conclusion, the Court found the cancellation of GST registration without providing an opportunity of hearing and proper application of mind to be in violation of principles of natural justice and legal precedents. The Court set aside the impugned orders and directed a fresh adjudication process with due consideration of the petitioner's submissions and a reasoned decision in accordance with the law.

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