High Court Quashes GST Cancellation for Vague SCN; Allows Fresh Proceedings with ITC Freeze

The assessee LLP challenged the Order-in-Original and the Order-in-Appeal, both relating to the cancellation of its GST registration. The petitioner argued that the original show cause notice dated 15/01/2022 was vague, merely parroting statutory language without disclosing specific allegations of fraud, suppression, or willful misstatement. Additionally, it relied on a letter from the Deputy Commissioner dated January 13, 2022, which the petitioner was not given or referred to.

The petitioner argued that there was an apparent breach of natural justice since it was not given a meaningful chance to reply. Furthermore, it was argued that these fundamental procedural flaws had gone unaddressed by the appellate authority.

Issue Raised: Whether it violates natural justice principles and calls for intervention under writ jurisdiction to cancel a GST registration based on a vague show-cause notice that omits important facts or documents.

HC’s Order: The High Court quashed both the impugned orders, holding that the original show cause notice (SCN) was deficient in material particulars and violated principles of natural justice. The Court did, however, permit the authorities to start new proceedings and ordered that a new SCN and all supporting documentation be released in four weeks. Following receipt of the SCN, the petitioner had four weeks to submit a reply. The authorities then had four weeks to hold a personal hearing and issue a reasoned order. The petitioner voluntarily agreed to refrain from using the accrued ITC for three months following the order’s date, which the court noted as legally binding.

To Read Full Order, Download PDF Given Below