HC Sets Aside GST Registration Cancellation order for Lack of Proper Notice

In a recent development, the petitioner contested the GST registration cancellation order dated June 21, 2023, issued by the Superintendent of the CGST Department. This cancellation was based on a show-cause notice dated June 15, 2023, which reportedly did not mention any specific reasons and also breached the mandatory 7-day reply period as per Rule 22 of the CGST Rules, 2017.

The department had relied on a report by an enforcement officer stating that no business activity was found at the registered premises. However, the petitioner claimed that the show-cause notice was too vague and the cancellation order was passed too early.

Issue Raised: Whether the GST registration cancellation order is still enforceable when the show-cause notice lacked specific grounds and an order was issued prior to the end of the statutory reply period.

HC’s Decision: The High Court, while allowing the petition, accepted the petitioner’s contentions. It held that the show-cause notice did not satisfy the requirements of Rule 22 or the prescribed Form GST REG-17, as it lacked reasons, and the cancellation order was passed before the 7-day period expired. The Court observed that the notice denied the petitioner a fair chance to reply since it only referred to a general clause without mentioning any particular infraction of the GST Act or Rules. The Court emphasised that following procedural protections provided under Rule 22 is a mandatory requirement and not optional. The authorities must follow statutory compliances and principles of natural justice in all cases. The Court quashed the cancellation order and permitted the department to issue a fresh, properly reasoned notice if necessary.

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