‘Reasons Are Heart And Soul Of Any Judicial And Administrative Order’: Allahabad HC Quashes Unreasoned Order Of GST Registration Cancellation

While setting aside order cancelling GST registration of assesee on grounds that it was unreasoned, the Allahabad High Court has held that ‘reasons are heart and soul’ of any order. In absence of reasons assigned, the order is vitiated in law.

Petitioner’s GST registration was cancelled by the Assistant Commissioner, Sector 25, State Tax, Kanpur Nagar. Appeal preferred by the petitioner was rejected on grounds of delay. Counsel for petitioner argued that the cancellation order was passed in violation of Section 29 (Cancellation or Suspension of Registration) of the UP Goods and Service Tax Act, 2017.

Further, it was argued that a quasi-judicial order which affects the rights of the parties under Article 19 of the Constitution of India cannot be passed without application of mind. The right of the petitioner to carry on business has been taken away without any mandate of law.

Per contra, Counsel for State justified the cancellation of registration on grounds that the petitioner had failed to file its return and discharge its tax liabilities. Dismissal of the appeal was justified as it was beyond the period prescribed under Section 107(4) of the Act.

Bench comprising of Justice Piyush Agrawal held that reasons for cancellation had not been assigned in the order passed by the authorities.

“The order of cancellation is in the teeth of various judgments of this Court as also referred to above. The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law.”

Reliance was placed on the judgments of the Allahabad High Court in Om Prakash Mishra vs. State of U.P. And others which was followed in M/s Chandra Sain, Sharda Nagar Lucknow through its proprietor Mr.Chandar Jain vs. U.O.I. Through Secretary, Ministry of Finance, New Delhi and 5 others. In the case of Om Prakash Mishra, the Court had held

“It is essential that every administrative authority or a quasi judicial authority should indicate the reasons, howsoever, brief they may be before passing an order of the nature which has been done by the authority. The order passed dated 15.03.2019 has a very harsh consequences and the same being without any reason whatsoever, fails to satisfy the test of a judicial order and suffers from the vice of violation of Article 14 of the Constitution of India, as such, the order dated 15.03.2019 is set aside with direction to the petitioner to file his response to the show cause notice before the respondent no.3 who shall pass fresh order after giving an opportunity of hearing to the petitioner with all expedition.”

Accordingly, the Court set aside the order of cancellation and consequential order of the first appellate authority with the direction that petitioner file a reply to the show cause notice.

Case Title: M/S World Solution vs. State Of U.P. And 2 Others [WRIT TAX No. - 931 of 2023]

Case Citation: 2023 LiveLaw (AB) 368

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