High Court Quashes GST Registration Cancellation Order for Non-Application of Mind:

The petitioner is a government contractor engaged in the construction business and had been registered under GST since January 2025. Earlier, a show cause notice dated 13 August 2025 was issued under Section 29(2)(e) of the CGST Act, 2017, alleging that the GST registration had been obtained through fraud, wilful misstatement or suppression of facts. The allegation was based on a communication from the Directorate General of GST Intelligence stating that no business activity was being carried out from the declared premises.

The petitioner submitted its reply, following which the cancellation proceedings were dropped on 2 September 2025 in Form GST REG-20. However, the same officer subsequently issued another show cause notice dated 6 April 2026 under Section 29(2)(e), again alleging fraud, wilful misstatement and suppression of facts and relying upon material substantially identical to that considered earlier.

Before the High Court, the petitioner contended that the subsequent proceedings were based on the same allegations and material that had already resulted in the dropping of the earlier cancellation proceedings. It was further submitted that the respondents had attempted to introduce allegations concerning fraudulent availment and passing of ITC from various firms, although the petitioner had never been called upon to respond to those allegations in the show cause notice.

The Court noted that both show cause notices were founded on the allegation that the GST registration had been obtained through fraud, wilful misstatement or suppression of facts and were based on substantially identical material. The earlier proceedings had already been dropped by the same officer through an order dated 2 September 2025.

The Court also observed that the investigation material referred to a search of the petitioner's premises, where no operational activity, accounting records, computer, laptop or printer were found. However, the Court found that the petitioner had not been specifically called upon to explain the subsequent allegations concerning fraudulent availment and passing of ITC.

Holding that the impugned show cause notice and cancellation order suffered from non-application of mind, the Gujarat High Court quashed and set aside the show cause notice dated 6 April 2026 and the cancellation order dated 17 April 2026. The writ petition was accordingly allowed.