The contested notice and order were nullified, respondents may initiate new proceedings in accordance with legal standards and principles of natural justice.

Facts of the case

The petitioner, M/s Citizen Industries, filed a writ petition after their GST registration was cancelled with retrospective effect. The core grievance centered on the fact that tax authorities implemented this backdated cancellation without providing any prior notification or specific grounds for such an adverse action. During the High Court proceedings, both the petitioner’s counsel and the respondent’s counsel reached a consensus: the authorities had failed to serve a specific show cause notice (SCN) regarding the retrospective nature of the cancellation prior to the issuance of the final order.

Issue of the case

Whether a retrospective cancellation of GST registration under Section 29 of the CGST Act is legally sustainable when the taxpayer was not served with a detailed show cause notice specifying the grounds for such action, thereby denying a reasonable opportunity to be heard and violating the principles of natural justice?

Decision of the Court

The High Court of Punjab and Haryana allowed the petition, setting aside the show cause notice dated 11.11.2024 and the order dated 27.11.2024 cancelling the petitioner’s GST registration, while reiterating that a valid show cause notice must clearly state the fundamental grounds on which the proposed action is based to enable an effective response; the Court further held that if authorities intend to take action with retrospective effect, the assessee must be duly informed of such intent along with the material relied upon, and although the impugned notice and order were quashed, liberty was granted to the respondents to initiate fresh proceedings in accordance with law and the principles of natural justice.