ORDER

ORAL ORDER

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

1. This Court, on 19.01.2023, under Article 226 of the Constitution of India, while issuing the notice for final disposal, passed the following :

“1. The petitioner is before this Court seeking to challenge the action of the respondent no.2 in cancelling the GST registration raising the ground of gross violation of principles of natural justice in quasi-judicial proceedings with the following prayers:

“14(a) That this Hon’ble Court may be pleased to issue a writ of certiorari and any other appropriate Writ, Order or direction, in the nature of Writ, thereby calling for the records maintained by the Respondent No.2 and after going into the validity and legality of the impugned Show Cause Notice dated 09.05.2022 (Annexure-B), and consequent ex-parte Order dated 24.06.2022, cancelling the Registration; 24DGDPS7158MIZR, (Annexure-D), passed by the Respondent No.2, be pleased to quash and set aside the same;

(b) That this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ, Order or direction, in the nature of Writ, directing the Respondent No.2 to produce all files, papers and proceedings in connection with the aforesaid actions initiated by them and after going through the same, be pleased to quash and/or set aside the non-speaking Show Cause Notice dated 09.05.2022, (Annexure-B) and consequent ex-parte Order dated 24.06.2022 (Annexure D) passed by the Respondent No.2; (c) To pass such order or orders as may be deemed fit and proper in the interest of justice.”

2. We have heard the learned advocate Mr. Modh who has relied upon the decision of Lakkad Brothers And Co. V/s State of Gujarat, in 2022 (12) TMI 957 being Special Civil Application No.25205 of 2022.

3. Notice for final disposal returnable on 3.2.2023. Let reply be filed on before the returnable date with a copy in advance by 24 hours to the other side.”

2. Ms. Pooja Ashar, learned Assistant Government Pleader appeared on instructions and has, on specific query raised, fairly submitted that the notice continues to remain cryptic. However, she has urged that since the order passed is in detail, alternative remedy shall made be available to the petitioner.

3. We have heard Mr. Hardik Modh, learned advocate for the petitioner.

4. We could see that the cryptic show cause notice for cancellation of registration was issued on 09.05.2002. It says thus:

“In case, Registration has been obtained by means of fraud, willful misstatement or suppression of facts. Your are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.”

5. Order of cancellation, according to the respondents, has come on some other grounds. Noticing the hollowness, the following paragraphs of the base decision of this Court in the case of Aggarwal Dyeing and Printing Works vs. State of Gujarat, [2022] 137 taxmann.com 332 (Gujarat) are reproduced as under:

“11. At the outset, we notice that it is settled legal position of law that reasons are heart and soul of the order and non communication of same itself amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice. This Court is bound by the said judgments hereinafter referred to. The necessity of giving reason by a body or authority in support of its decision came for consideration before the Supreme Court in several cases. Initially, the Supreme Court recognized a sort of demarcation between administrative orders and quasi-judicial orders but with the passage of time the distinction between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of the Supreme Court in A.K. Kraipak v. Union of India [1970] 1 SCR 457. The Hon’ble Supreme Court vide judgments in the cases of Ravi Yashwant Bhoir v. District Collector, Raigad [2012] 4 SCC 407, Sant Lal Gupta v. Modern Co operative Group Housing Society Ltd. [2010] 13 SCC 336; Kranti Associates (P.) Ltd. v. Masood Ahmed Khan [2010] 9 SCC 496; Abdul Ghaffar v. State of Bihar [2008] 3 SCC 258, has expanded the horizon of natural justice and reasons have been treated part of the natural justice. It has gone to the extent in holding that reasons are heart and soul of the order. The absence of reasons renders an order indefensible/unsustainable particularly when it is subject to appeal/revision. It is to be noted that in the case of Kranti Associates (P.) Ltd. (supra), the Hon’ble Supreme Court after considering various judgments formulated certain principles which are set out below:

“a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.

b. A quasi-judicial authority must record reasons in support of its conclusions.

c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasijudicial or even administrative power.

e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.

f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

g. Reasons facilitate the process of judicial review by superior Courts.

h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.

i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system.

j. Insistence on reason is a requirement for both judicial accountability and transparency.

k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or ‘rubber-stamp reasons’ is not to be equated with a valid decision making process.

m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny (See David Shapiro in Defence of Judicial Candor (1987) 100 Harvard Law Review 731-737);.

n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553 at 562 para 29 and Anya v. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, “adequate and intelligent reasons must be given for judicial decision.”

o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of “Due Process”.

Thus, the position of law that emerges from the decisions mentioned above, is that assignment of reasons is imperative in nature and the speaking order doctrine mandates assigning the reason which is the heart and soul of the decision and said reasons must be the result of independent re-appreciation of evidence adduced and documents produced in the case.

12. At this stage it would be germane to refer to observations made by the Andhra Pradesh High Court in the case of MRF Mazdoor Sangh v. Commissioner of Labour 2014 (3) ALT 265, wherein the matter of cancellation of registration of trade union, it was held that :  

“The show cause notice should reflect the jurisdictional facts based on which the final order is proposed to be passed. The person proceeded against would then have an opportunity to show cause that the authority had erroneously assumed existence of a jurisdictional fact and, since the essential jurisdictional facts do not exist, the authority does not have jurisdiction to decide the other issues.”

12.1 We find that the aforesaid observation would squarely apply to the present facts of the case on hand. Thus, the sum and substance of various judgments on the principles of natural justice is to the effect that wherever an order is likely to result in civil consequences, though the statute or provision of law, by itself, does not provide for an opportunity of hearing, the requirement of opportunity of hearing has to be read into the provision.

13. It cannot be disputed that the writ applicant is liable to both civil and penal consequences pursuant to the impugned order of cancellation of certificate of registration. In all the writ applications we could note from the tabular details that the show cause notice though issued in the prescribed form does not elaborate the reasons and the one line reason mentioned is nothing but the reproduction of either of the reasons provide under rules regarding cancellation of registration.

It appears from the materials on record that the respondent no. 2 issued a show-cause notice dated 18th September, 2018 in the Form GST REG-17, calling upon the writ-applicant to show-cause as to why the registration under the GST should not be cancelled. Such notice issued by the respondent no. 2 is under Rule 22(1) of the Central Goods and Services Tax Rules, 2017. The notice dated 18th September, 2018 referred to above reads as under :

“Form GST REG-17

[See Rule 22(1)]

Reference Number : ZA240918027128D

Date : 18-9-2018

To

Registration no. (GSTIN/Unique ID) : 24AEXPA3306

SANJEEV PREM AGGARWAL

SURVEY NO.230, OPP. MARIYA BANK, B/H RANIPUR

VILLAGE,NAROL,

Ahmedabad, Gujarat 382405.

Show Cause Notice for Cancellation of Registration

Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons :

1. Any Tax payer other than composite taxpayer has not filed returns for a continuous period of six months. You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.

You are hereby directed to appear before the undersigned on 27-9-2018 at 12:42.

If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.

Place : Gujarat

Signature valid digitally signed by OS

Goods and Service Tax Network 1.

Date: 2018.09.18 13.00.44″

13.1 To say the least, the respondent authority i.e. the Assistant/Deputy Commissioner, State tax Officer ought to have atleast incorporated specific details to the contents of the show cause. Any prudent person would fail to respond to such show cause notice bereft of details thereby making the mechanism of issuing show cause notice a mere formality and an eye wash.”

6. This Court has followed Aggarwal Dyeing and Printing Works (supra) in various decisions, wherever there is a violation of principles of natural justice, the order of cancellation of GST registration is frowned upon and also viewed seriously. Relying on these decisions, the show cause notice dated 09.05.2022 and the order of cancellation of registration dated 24.06.2022 are quashed and set aside with a direction to respondent No.2 to restore the registration forthwith. Further directing that henceforth the decision of Aggarwal Dyeing and Printing Works (supra),which has come in January, 2022, let there be caution in ensuring that this is not repeated in future notices as may be issued.

7. We are given to understand that there is a circular of instructions amongst the officers. Therefore, we chose not to order any amount of cost.

8. Liberty is granted to respondent No.2 to issue fresh notice with all particulars of reasons incorporated with details and, thereafter, to provide reasonable opportunities to the parties representing the case and also for personal hearing in accordance with law. Thereafter to pass a speaking order on merits and in accordance with law. It shall be open for the petitioner to respond to such notice without seeking adjournment.

9. Let there be cooperation on the part of the petitioner, once the notice is issued within a reasonable time period and after once the copy is received.

10. Petition stands disposed of accordingly.