ORDER
1. Counter affidavit filed today by Sri K.D. Nag, learned counsel for respondent nos.2 and 3 is taken on record.
2. Heard Sri Mukesh Kumar Tewari, learned counsel for the petitioner and Sri K.D. Nag, learned counsel for respondent nos.2 and 3.
3. It has been submitted on behalf of the petitioner that the petitioner is duly registered with the GST Department under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “Act of 2017”) and is engaged in the business of old iron scraps. A show cause notice was issued to the petitioner on 15.12.2025 with regard to the violation of the provisions of Section 16 of the Act of 2017, directing him to file his reply within seven days and to appear before the competent authority on 18.12.2025. The petitioner neither filed his reply nor appeared before the competent authority, consequent to which his registration was cancelled by means of an order dated 07.01.2026.
4. The petitioner, on coming to know about the order dated 07.01.2026, moved an application for revocation of cancellation on 13.01.2026. On his application, again a show cause notice was issued to the petitioner on 20.01.2026 asking him to appear on 23.01.2026 and also to furnish his reply within seven days. The petitioner received the letter dated 20.01.2026 and furnished his reply on 24.01.2026. It has also been submitted that by means of the impugned order dated 06.02.2026, his application for revocation was rejected. It has further been submitted that despite the fact that he submitted his reply much prior to the passing of the order dated 06.02.2026, none of the grounds taken by the petitioner in his reply were considered by the respondents and by a cryptic order it was merely stated that “your supplier has been found non-existing; therefore, your application is rejected in accordance with the provisions of the Act of 2017.”
5. It is noticed that in the reply furnished by the petitioner, he had opposed all the allegations levelled against him regarding obtaining supplies from non-existing companies at the relevant time and further stated that all the transactions were carried out in the normal course of business. It was also stated that in case the supplier had defaulted in payment of tax due to certain reasons beyond the petitioner’s control, he ought not to be penalized for the same. It is noticed that none of the grounds taken by the petitioner were either considered or dealt with by the competent authority while passing the order dated 06.02.2026 rejecting his application for revocation of cancellation of registration.
6. This Court is of the considered view that when a show cause notice was issued to the petitioner asking him to furnish his reply, pursuant to which the petitioner filed his response, all the grounds taken therein ought to have been considered by the competent authority while deciding the application for revocation of cancellation of registration.
7. It is further noticed that reasons are the heartbeat of any order, and bereft of reasons, such an order would be arbitrary and illegal. Whenever a reply is tendered against a show cause notice, even if it is found to be unsatisfactory, the competent authority has to record reasons for the rejection of such objections while giving cogent reasons. In case reasons are not given, then such an exercise itself becomes arbitrary inasmuch as it deprives the benefit to the superior authorities for adjudicating such an order passed by the competent authority nor does it disclose the reason for rejecting the defence of the delinquent employee which may enable the competent authority to act unreasonably and arbitrarily. We further find that the Supreme Court has also on numerous occasions held that reasons are required to be given while passing any order.
8. Hon’ble the Supreme Court in the case of S.N. Mukherjee v. Union of India (1990) 4 SCC 594 has held as under:-
“36. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision, are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.”
9. From the aforesaid enunciation, it is clear that by a cryptic order the application of the petitioner has been rejected without assigning any reasons and, consequently, the said order is, on the face of it, arbitrary, illegal and liable to be set aside.
10. Learned counsel for the respondents has submitted that the petitioner has an efficacious remedy of appeal against the impugned order and in support thereof he relied upon the judgment of the Hon’ble Supreme Court in the case of
CIT v.
Chhabil Dass Agarwal (SC)/(2014) 1 SCC 603.
11. It is noticed that the Court, in the said judgment, was of the considered view that ordinarily a person in taxing matters should be relegated to the statutory remedy as provided under the particular statute and the writ court should be reluctant to interfere in such matters. Undoubtedly, considering the aforesaid judgment, this Court finds that where an order is patently illegal and arbitrary and either no opportunity of hearing has been given or the order does not disclose any reasons, the writ court can validly exercise its jurisdiction under Article 226 of the Constitution of India and there is no bar to entertaining a petition under Article 226 of the Constitution of India. Accordingly, the objection of the respondents with regard to the maintainability of the petition is rejected.
12. Learned counsel for the respondents has also referred to the judgment and order dated 12.05.2026 passed by this Court in Writ Tax No. 629 of 2026, Saurabh Kumar Gupta v. Union of India through Secretary, Ministry of Finance, New Delhi, to contend that the petitioner should be relegated to avail the remedy of appeal under Section 107 of the Act of 2017, as after due investigation proceedings for cancellation of registration were undertaken upon sufficient material being found against the petitioner and there is no defect in the show cause notice.
13. The judgment relied upon by learned counsel for the respondents in the case of
Saurabh Kumar Gupta (
supra) was rendered in the facts of that case where it was found that the petitioner had not responded to the notice sent through registered post as per Section 169 of the Act, which constitutes valid and effective service. However, in the present case, this Court finds that while issuing the notice dated 15.12.2025 for cancellation of registration, seven days’ time was granted to the petitioner to file his reply to the notice, i.e., up to 22.12.2025, but the date of personal hearing was fixed for 18.12.2025, which was prior to the expiry of the last date for filing the reply to the show cause notice. Such a course could not have been adopted, as the date of hearing ought to have been fixed after the expiry of the period granted for filing of reply; otherwise, there cannot be a meaningful hearing without the petitioner having an opportunity to submit his response to the show cause notice and the show cause notice itself was defective. A division bench of this Court, by its judgment and order dated 04.04.2025 in Writ Tax No. 138 of 2025,
Excellence Trades and Services (P.) Ltd. v.
State of U.P. (
Allahabad), has held as follows :-
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Further submissions have been made that the very fact that the date of hearing was prior to the date of filing reply, the said opportunity was an empty formality and this Court in M/s Mahaveer Trading Company v. Deputy Commissioner State Tax and another : Writ Tax No. 303 of 2024, in similar circumstances, has set aside the order passed, which was found to be in violation of principles of natural justice. |
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Learned Standing Counsel is not in a position to dispute the fact that the date, apparently on account of some typographical mistake, was fixed prior to the date of filing reply and that the petitioner, in fact, was not provided any opportunity of hearing. |
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In view of above fact situation, wherein the provisions of Section 75(4) of the Act, envisage providing opportunity of hearing and the same apparently has been negated on account of fixing date of hearing prior to the filing of reply, the order impugned dated 05.01.2024 passed by the respondent no. 3 cannot be sustained. |
14. Similarly, while issuing notice dated 20.01.2026 in the proceedings for revocation of cancellation of registration, the Assistant Commissioner, Lucknow-III, granted seven days’ time for filing of reply to the notice, but the date of personal hearing was fixed for 23.01.2026, i.e., before the expiry of the period granted for filing of reply to the show cause notice dated 20.01.2026 which was also defective. Thus, the facts of the present case are clearly distinguishable from those in Saurabh Kumar Gupta (supra), and the said judgment is not applicable to the facts and circumstances of the present case, rather is covered by the judgment passed in the case of Excellence Trades and Services Private Limited (supra).
15. In view of the above, the writ petition is allowed. Consequently, the impugned orders dated 07.01.2026 and 06.02.2026 are set aside.
