Allahabad High Court Quashes GST Registration Cancellation for Implex Infrastructure Pvt Ltd

Court Orders Fresh Adjudication, Citing Violation of Natural Justice and Fundamental Rights

In a significant ruling, the Allahabad High Court has quashed the cancellation of GST registration for M/S Implex Infrastructure Pvt Ltd, citing the failure to provide a valid notice and reasons for cancellation, thus violating principles of natural justice and fundamental rights under the Constitution of India. The judgment was delivered by Justice Piyush Agrawal, addressing the writ petition filed by the company challenging the orders dated 31 March 2025 and 16 May 2023.

The petitioner, Implex Infrastructure Pvt Ltd, a private limited company engaged in real estate, had its GST registration canceled due to non-filing of returns for six consecutive months. The company argued that the cancellation was enforced without proper notice or a hearing, infringing on their rights under Article 19(1)(g) and Article 14 of the Constitution, which guarantee the right to practice any profession or business and ensure equality before the law, respectively.

The court reviewed the records and found that the show cause notice issued on 12 April 2023 was deficient, lacking the name and description of the proper officer, which is essential for a legal and valid notice. The notice did not specify before which officer the petitioner was required to appear, rendering it improper and unlawful. Moreover, the petitioner was first informed about the cancellation in February 2025, long after the cancellation had been finalized.

Justice Agrawal emphasized the importance of adherence to principles of natural justice, noting that the impugned orders were issued without affording a personal hearing to the petitioner, and were devoid of any reasoning for the adverse action taken. The court held that such orders could not be sustained legally, as they did not meet the constitutional requirements of fairness and due process.

Additionally, the court addressed the issue of the dismissed appeal on the grounds of limitation, affirming that the doctrine of merger does not apply when the original order lacks reasons for the adverse action. This aspect was pivotal in determining that the petitioner could challenge the original order despite the appeal being dismissed.

The judgment referenced several precedents, including Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, wherein the Supreme Court held that orders affecting fundamental rights must be reasoned and can be challenged if found deficient. The Allahabad High Court reiterated this stance, ordering a de novo adjudication of the case.

The court instructed the adjudicating authority to issue a fresh notice to Implex Infrastructure Pvt Ltd, clearly stating the reasons for the proposed cancellation, within a week of receiving the certified copy of the order. The petitioner is then required to respond within 21 days, following which the authority must issue a reasoned and speaking order within two weeks, ensuring due opportunity for a hearing.

This judgment underscores the judiciary's commitment to uphold natural justice and protect fundamental rights, setting a precedent for similar cases where procedural lapses occur in administrative actions affecting businesses.

Bottom Line:

Cancellation of GST Registration - Impugned order quashed for failure to provide valid notice and reasons for cancellation, violating principles of natural justice and Article 14 of the Constitution of India.

Statutory provision(s): GST Act Section 107, Article 14 of the Constitution of India, Article 19(1)(g) of the Constitution of India

M/S Implex Infrastructure Pvt Ltd v. State Of U.P., (Allahabad) : Law Finder Doc Id # 2812880