Allahabad High Court annuls GST registration cancellation: defective notice and unreasoned order held unsustainable
Background of the dispute
The matter in One Place Infrastructure Vs State of Up And 2 Others came before the Allahabad High Court as a writ petition challenging:
- The order cancelling the assessee’s GST registration, and
- The appellate order rejecting the challenge solely on the ground of limitation.
The assessee, a private limited company engaged in government contract execution and holding GSTIN No. 09AABC06227H1ZE, faced cancellation of its GST registration on the allegation of non-filing of returns for preceding tax periods.
A show cause notice in FORM GST REG-17 dated 06.09.2023 was purportedly issued by respondent no. 3, requiring the assessee to respond within 30 days. Subsequently, an ex parte cancellation order dated 02.05.2023 was passed cancelling the registration on the ground of non-filing of returns for earlier quarters.
The assessee filed an appeal before respondent no. 2, which was dismissed by order dated 26.09.2024 exclusively on the ground of delay, without entering into the merits of the cancellation itself. Aggrieved, the assessee approached the High Court under Article 226 of the Constitution of India.
Relief sought in the writ petition
The assessee sought issuance of a writ of certiorari to set aside:
- The order dated 13.10.2023 passed by respondent no. 3, and
- The appellate order dated 26.09.2024 passed by respondent no. 2.
The core grievance was that both orders were vitiated by:
- Breach of principles of natural justice, and
- Infringement of the fundamental right to carry on business under Article 19(1)(g) of the Constitution of India.
Assessee’s submissions before the Court
Challenge to the show cause notice and cancellation proceedings
Counsel for the assessee contended that:
- The show cause notice in FORM GST REG-17 dated 06.09.2023, which formed the basis of the cancellation, was fundamentally defective.
- On examination of the notice (Annexure No. 6 to the writ petition), it was evident that:
- The name of the issuing “proper officer” was not mentioned, and
- The designation of the concerned officer was also missing.
- As a result, the notice did not disclose before which authority the assessee was required to appear or submit its explanation.
It was argued that such a notice cannot be treated as a valid show cause notice under the GST law, as it fails to indicate the competent authority or the jurisdictional officer, depriving the assessee of a meaningful opportunity to participate in the proceedings.
Lack of notice and opportunity of hearing
The assessee further submitted that:
- No proper opportunity of hearing was afforded prior to passing the ex parte cancellation order dated 02.05.2023.
- The assessee became aware of the cancellation only around January 2024, much after the order had already taken effect.
- No personal hearing was granted before taking an adverse decision impacting the assessee’s right to do business.
On this basis, it was asserted that the entire cancellation process was in complete disregard of the principles of natural justice.
Violation of constitutional protections
It was also urged that:
- Cancelling the registration, which is essential for conducting business under the GST regime, directly impacts the assessee’s right to carry on trade or business under Article 19(1)(g) of the Constitution of India.
- The impugned orders, being unreasoned and passed without application of mind, also fail to meet the requirement of Article 14, which mandates non-arbitrariness in State action.
Doctrine of merger and maintainability of writ
Counsel for the assessee pointed out that:
- Although the appellate authority had dismissed the appeal on the ground of delay/laches, it did not examine the merits of the cancellation order.
- Consequently, the doctrine of merger would not be attracted, as the appellate order did not affirm or modify the cancellation order on merits.
Relying on **Whirlpool Corporation Vs.