GST Objection cannot be rejected without giving valid reasons

New Shanti Restaurant vs. Up State and 2 Others (Allahabad High Court)

In the case of New Shanti Restaurant Vs State of UP & OthersThe Allahabad High Court took up the issue of dismissal of GST objections merely on the ground of late filing without proper explanation. The petitioner, New Shanti Restaurant, filed a writ petition challenging the dismissal of its GST appeal by the appellate authorities. The petitioner argued that the appeal was rejected without any specific reason other than a notice stating there was a delay in shipping. The State, represented by its lawyer, defended the rejection stating that the objection was time-barred and the justification was available on the GST portal.

However, the Court ruled that the appellate authority’s decision was insufficient because it failed to provide valid justification. Referring to the jurisprudence of the Supreme Court, the Court emphasized that providing reasons for administrative and judicial orders is a fundamental aspect of natural justice. Without detailed justification, the decision becomes subjective and open to appeal. The court reiterated that any administrative or judicial authority must provide a reasoned decision, failure to do so would make the decision unsustainable.

Consequently, the Court quashed the impugned orders and allowed the filing of the writ petition. The case was remanded to the appellate authority with instructions to reconsider the objection and issue a new, reasoned decision after giving the petitioner an opportunity to be heard. The official was instructed to resolve the issue within three months.

FULL TEXT OF ALLAHABAD HIGH COURT JUDGMENT/ORDER

We heard Ms. Pooja Srivastava, who was trained as an advocate for the petitioner 1 and as a Standing Advocate for the State respondents.

2. In accordance with the instructions given earlier, instructions have been recorded.

3. There are similar disputes in both of the aforementioned writ petitions, and by agreement of the parties, both of the writ petitions in question are being decided by joint decision on the basis of Execution Tax No. 1597 of 2024.

Year 2024 – TAX CERTIFICATE No. 1597

4. By way of the present petition, the petitioner inter alia prays for the following relief:-

“i) Respondent no. To issue a letter, order or instruction in the nature of certiorari, dated 22.7.2024, canceling the defendant decision. 2 Additional Commissioner Grade -2, Appeal 1. State Tax, Prayagraj (writ petition is attached Annexure 1) and respondent no. 3 Deputy Commissioner, State Excise Department -3 Prayagraj (writ petition is attached as Annexure 2) during the pendency of the present writ petition before this Hon’ble Court. “

5. Learned counsel for the petitioner submits that electronic objection was preferred against the order passed by the officer concerned but the same was rejected by the impugned order without giving any reason. He submits that the petitioner communicated the decision only by way of a notice that his objection was rejected. It further states that neither any decision has been issued nor any grounds have been given for dismissing the appeal.

6. On the contrary, Arvind Mishra learned that ACSC upheld the impugned orders and held that once the objection was filed in GST APL-01, the approval was given and then the final approval GST APL-02 was published on the GST portal and if the objection was found to be inadmissible, the same was rejected. He also claimed that the justification was reflected in rejecting the objection and that it could be downloaded from the official website. Since the appeal in the said case was barred by statute of limitations, the same was dismissed.

7. After hearing the learned counsel for the parties, the Court perused the records and the directions given by the learned Standing Counsel.

8. There is no dispute that the petitioner filed an appeal and this appeal was rejected vide order dated 22.7.2024 without giving any reasons. Based on the directions submitted today, it is learned that Standing Counsel has sought to support the respondent’s case, but a perusal of the directions shows that no reason has been identified for dismissing the petitioner’s appeal. This refers only to the delay in filing the appeal; This shows that the appellate authority did not use its mind in rejecting the petitioner’s objection.

9. It is an established law that the mind is the heartbeat of every outcome. It is not possible to maintain an order without valid reasons. Giving reasons is the rule of natural justice. One of the most important issues that require the recording of the mind is the replacement of subjectivity with objectivity. It is obvious that not only the judicial order but also the administrative order must be supported by the reasons recorded in it.

10. The Honorable Supreme Court, underlining this rule, Deputy Commissioner, Commercial Tax Department, Works Contract and Leasing, Quota Vs. Shukla & Brothers, (2010) 4 SCC 785, M/s Travancore Rayon Ltd. – Union of India, 1969 (3) SCC 868 They observed that the administrative authority and the court are obliged to provide justification, and that the absence of this would subject the decision to judicial punishment. Where the justification for imposing the penalty is not established by the competent authority, it will not be possible to sustain the disputed orders on that ground alone.

11. Considering the facts and circumstances of the case and the law laid down by this Court, the impugned orders passed in both the writ petitions are unacceptable in the eye of law and the same are set aside.

12. Both the writ petitions succeeded and were allowed.

13. The matter is referred to the appellate authority, which will pursue the case. new and after giving the petitioner the necessary opportunity for hearing, shall issue an appropriate reasoned and speaking order within three months from today.