Allahabad High Court Revokes Suspension Order of State Tax Officer

Court orders departmental inquiry to be concluded within four months, emphasizing procedural fairness in the suspension of Malikhan Singh

In a significant ruling, the Allahabad High Court on November 18, 2025, set aside the suspension order of Malikhan Singh, a State Tax Officer, who was previously suspended on grounds of delayed submission of an adverse report against a bogus firm. The judgment, delivered by Justice Vikas Budhwar, underscored the importance of procedural fairness and the necessity of a timely departmental inquiry.

The suspension of Malikhan Singh, dated August 23, 2025, was issued by the Commissioner of State Tax, Uttar Pradesh, citing a delay in reporting fraudulent activities by M/s B.K. Traders. Singh, stationed in Etawah, had identified the firm as bogus after conducting a physical verification on December 3, 2024, and promptly reported his findings. However, despite the adverse report, the firm managed to claim Input Tax Credit (ITC) fraudulently amounting to over Rs.3 crores.

Justice Budhwar noted that the adverse report was indeed acted upon by the Assistant Commissioner, who issued a show cause notice to the firm on December 5, 2024, yet failed to suspend the GST registration, thereby allowing the fraudulent ITC claim on January 13, 2025. The court found that the delay in submission was not fatal enough to warrant suspension, especially when the report was acted upon appropriately.

The ruling mandates that while the suspension order is revoked, a comprehensive departmental inquiry should be conducted within four months to ensure accountability and transparency. The court highlighted the procedural lapses at the level of the Assistant Commissioner, who did not suspend the GST registration despite knowledge of the adverse report, questioning the grounds on which Singh's suspension was based.

Counsel for the petitioner, Prashant Mishra, argued that Singh’s actions were in compliance with the circular dated November 14, 2018, which allows deemed registration post three days of application and mandates the submission of verification reports within fifteen days. He maintained that Singh had acted in accordance with these guidelines, and the delay, if any, was not substantial enough to justify suspension.

The standing counsel for the state, acknowledging the submission of the report and subsequent actions, agreed to the court's directive for a departmental inquiry but supported the setting aside of the suspension order.

This judgment by the Allahabad High Court serves as a critical reminder of the balance between procedural timelines and substantive justice, ensuring that officials are not penalized for procedural delays when they have acted in good faith and within their professional duties. The departmental inquiry, as directed, aims to address any lapses and ensure accountability within the state tax administration.

Bottom Line:

Suspension order of a State Tax Officer set aside as the delay in submitting the adverse report against a bogus firm was not fatal and departmental inquiry directed to be concluded within four months.

Statutory provision(s): U.P. Government Servant (Discipline and Appeal) Rules, 1999

Malikhan Singh v. State of U.P., (Allahabad) : Law Finder Doc Id # 2811286