Gujarat High Court Quashes GST Cancellation Rejection Passed Without Reasons

The petitioner, M/s. Virani Metal Industries, a sole proprietorship engaged in manufacturing copper wire from copper scrap, was registered under the Gujarat State Goods and Services Tax Act, 2017. The petitioner’s business was taken over by Copperwrx Tradelink Private Limited pursuant to an Agreement dated 07.03.2024. After the takeover, the petitioner applied for cancellation of its GST registration by filing Form GST REG-16, stating that it had no stock, capital goods, or outstanding tax liability as of the date of application.

The revenue authorities rejected the cancellation application by an order dated 03.10.2024 on the ground that documents relating to amalgamation and liabilities were not provided. The petitioner thereafter filed a second application for cancellation on 19 October 2024, which was again rejected by an order dated 30 November 2024 without assigning detailed reasons. Aggrieved by the rejection order, the petitioner approached the High Court, challenging the legality of the rejection order.

Issue Before Court: Whether rejection of an application for cancellation of GST registration can be sustained when the order is non-speaking and does not disclose reasons.

HC’s Order: The Hon’ble High Court allowed the writ petition to the limited extent of quashing the impugned order dated 30.11.2024. The Court held that the rejection order was a non-speaking order, as it merely stated that the reply was examined, without recording any reasons or application of mind.

The Court clarified that it had not examined the merits of the later show-cause notice proposing cancellation of registration ab initio. It was held that issuance of such notice did not render the petition infructuous, as the defect of a non-speaking order persisted. The petitioner was granted liberty to raise all contentions in the proceedings initiated after the second notice was served. Therefore, the impugned rejection order was quashed and set aside, and the Rule was made absolute to that extent.

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