High Court Quashes GST Registration Cancellation Passed Without Proper Notice or Hearing

Petitioners are private limited companies dealing in real estate. A show-cause notice dated 12/04/2023 was served suggesting cancellation of registration on the ground of non-furnishing of returns for a period of six months consecutively. Subsequently, an ex parte order of cancellation was passed on 16/05/2023 on the basis that earlier returns had not been submitted. According to petitioners, they received information in February 2025 regarding the cancellation.

On consideration of the record, the Court found that the show-cause notice did not disclose the name or designation of the proper officer before whom the petitioners were required to appear. The cancellation order had been passed without affording any opportunity of personal hearing and without a reasoned application of mind. Given that the impugned order adversely affected the petitioners’ right to carry on business under Article 19(1)(g), and lacked compliance with principles of natural justice and Article 14, the Court held the orders to be legally unsustainable.

Issue Raised: Whether cancellation of GST registration and dismissal of the appeal on limitation grounds can be sustained where the initial show-cause notice is defective for not specifying the proper officer, and the cancellation order is passed without affording an opportunity of hearing, thereby violating principles of natural justice and Articles 14 and 19(1)(g) of the Constitution.

HC’s Ruling: The Court held that the show-cause notice failed to disclose before which officer the petitioners were to appear and therefore was not a valid notice in law. The cancellation order was passed mechanically and without a personal hearing, and did not reflect an application of mind; thus, it failed the test under Article 14 and principles of natural justice. The Court observed that where no reason has been assigned for cancellation, the doctrine of merger does not save the order even if the appeal was dismissed on limitation grounds.

Thus, both the impugned cancellation order and the appellate order were quashed. The matter was remanded to the adjudicating authority with the following directions (as in the judgment): the authority shall, within one week of production of a certified copy of the order, issue a fresh notice specifying the reasons for proposed cancellation; the petitioners shall be given 21 days from receipt of that notice to file their reply; and after receiving the reply and affording due opportunity of hearing (including personal hearing), the authority shall pass a reasoned and speaking order within two weeks thereafter. The writ petition was allowed.

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