GST: High Court Sets Aside GST Registration Cancellation for Ignoring Taxpayer’s Reply

N.K.R. Enterprise, a proprietary concern, was issued a show-cause notice in Form GST REG-17 proposing cancellation of its GST registration under Section 29 of the CGST Act, 2017. The notice was founded on an internal “confidential communication” from the enforcement wing recommending cancellation in the interest of revenue.

The petitioner submitted a detailed reply on 13.08.2025 through the GST portal, enclosing documents to demonstrate that no ineligible input tax credit had been availed. However, the Superintendent passed a final order cancelling the GST registration without considering or recording any finding on the reply or the supporting material. Aggrieved, the petitioner approached the High Court.

Issue Before HC: Whether cancellation of GST registration is valid when the adjudicating authority ignores the taxpayer’s reply and supporting documents and records no findings on the merits.

HC Ruled: The Hon’ble High Court allowed the writ petition and quashed the cancellation order. The Court held that a fundamental procedural flaw vitiated the impugned order, as the authority had completely failed to consider the petitioner’s reply and documentary evidence.

The Court observed that an order affecting civil rights must disclose due application of mind to the explanation offered by the affected party. Passing a cancellation order without dealing with the reply on merits renders the decision arbitrary and unsustainable in law.

Therefore, the matter was remanded to the Superintendent with a direction to grant the petitioner a proper opportunity of hearing and to pass a fresh, reasoned order within twelve weeks.

To Read Full Judgment, Download PDF Given Below