The Allahabad High Court has set aside an appellate order concerning cancellation of GST registration, holding that the appellate authority failed to properly consider the taxpayer’s contentions and provide adequate reasons for rejecting them.
The bench of Justice Vikas Budhwar observed that an appeal is a valuable statutory right and that the appellate authority bears a greater responsibility to examine every aspect of the matter. Even where the grounds raised by a taxpayer are legally untenable, the authority must explain the reasons for rejecting them.
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The petitioner, a proprietorship concern engaged in the distribution of edible oil, stated that its GST registration was cancelled on April 4, 2026. It subsequently applied for revocation of the cancellation.
A show cause notice fixed the hearing on the proposed rejection of the revocation application for May 26, 2026, at 11:30 a.m. However, according to the petitioner, the authority rejected the application on May 16, 2026—ten days before the scheduled hearing.
The taxpayer filed an appeal on May 21, 2026. The appellate authority rejected it by an order dated June 23, 2026, prompting the writ petition before the High Court.
The petitioner argued that deciding the revocation application before the notified hearing date, without informing it of any advancement of the hearing, violated the principles of natural justice.
It also challenged the quality of the appellate authority’s reasoning. Counsel submitted that although the appellate order ran to approximately four-and-a-half pages, around three-and-a-half pages merely recorded the respective submissions of the taxpayer and the department.
According to the petitioner, the order did not meaningfully examine its grounds. It argued that the authority could reject those grounds on their merits, but could not dispense with the obligation to explain why they did not warrant relief.
The State defended the appellate order, submitting that it was valid and did not call for interference.
After examining the memorandum of appeal and the appellate order, the High Court found that the petitioner’s contentions had not been considered in the correct perspective.
The court emphasised that the statutory right of appeal carries a corresponding obligation on the appellate authority to examine the issues placed before it. The possibility that a ground may ultimately fail does not remove the requirement to give reasons.
“Might be, the grounds taken are not tenable but reasons have to be accorded,” the court observed, adding that “reasons are the lifeline of the conclusions.”
The judgment also records that when the court specifically asked the State’s counsel whether the reasons provided were adequate, the answer was in the negative.
Finding that the appellate order had not been passed in accordance with law or upon proper consideration of the issues, the court held that it could not be sustained.
The High Court set aside the appellate order dated June 23, 2026, and remitted the matter to the appellate authority for a fresh decision within two months.
The court did not itself restore the petitioner’s GST registration or finally decide the merits of the revocation application.
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