High Court Slams GST Dept for Vague SCN, Restores Registration

The petitioner, M/s Glo Interio, was granted GST registration on 05.06.2019. After discontinuing business, the petitioner applied for voluntary cancellation of registration under Section 29 of the GST Act. A show cause notice dated 14.01.2021 was issued alleging non-payment of tax for over three months. The petitioner did not file a reply, and the GST registration was cancelled.

The appeal filed by the petitioner was dismissed as time-barred by a cryptic order, leading to the present writ petition.

Main Issue: Whether retrospective cancellation of GST registration is sustainable when the show cause notice is vague and does not specify the period, quantum of tax dues, or the proposed effective date of cancellation.

HC Held: The Hon’ble High Court partly allowed the writ petition and quashed the retrospective cancellation of GST registration. The Court held that the show cause notice was vague, as it did not specify the period of default, the amount of tax due, or clearly indicate that cancellation was proposed with retrospective effect. Such a notice was found to violate principles of natural justice and the guarantee of a fair hearing under Article 14 of the Constitution.

Thus, both the cancellation order and the appellate order were set aside. The Court permitted the department to issue a fresh, detailed show cause notice and complete adjudication within the stipulated timelines. Costs of Rs. 10,000 were imposed on the petitioner for delayed appellate proceedings.

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