Punjab and Haryana High Court Quashes Retrospective GST Cancellation

The Division Bench of the Punjab and Haryana High Court, Chandigarh, a Division comprising Justice Deepak Sibal and Justice Lapita Banerji, came to this judgement. It involved government officials reversing the GST registration of MD Industries retrospectively. An order dated 18.11.2024 put in effect that the petitioner’s GST registration had been cancelled from 01.07.2017, as indicated by a show cause notice issued on 27.09.2024.

The petitioner objected to this cancellation arguing that the show cause notice did not state that retrospective cancellation was proposed. Based on the earlier judgment in M/s Bansal Casting v. Union of India (20.02.2026), which held that although Section 29 of the CGST Act allows retrospective cancellation, the Act must be subject to specific contingencies and reasons, the Bench studied the matter closely.

It noted in a letter, “a show cause notice must contain the basic grounds or premises on which action is sought to be taken” and that the assessee must “provide a fair opportunity” to respond. The Bench similarly referred to the ruling of the Supreme Court in ORYX Fisheries Pvt. Ltd., v. Union of India (2010) 13 SCC 427, finding that “a quasi-judicial authority, when under the power conferred by statute, must behave fairly and with the open mind, when commencement of a show cause proceeding”.

The Court ruled that the order dated 18.11.2024 was unsustainable because, unlike SCC, the petitioner had not been provided notice of retrospective cancellation. As a result, the Division Bench set aside the show cause notice and the cancellation order and allowed the authorities to carry on in accordance with law again. Subsequently, the petition was allowed and pending orders were disposed of.

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