Gauhati High Court on Stale Show Cause Notices and GST Registration Cancellation

The Gauhati High Court in S R Enterprise Vs Union of India nd 2 Ors examined whether a long‑pending, unattended show cause notice could legitimately form the basis for cancelling a GST registration under the Central Goods and Services Tax Act, 2017. The Court ultimately held that relying on such a stale notice, without considering subsequent developments and without affording a fresh meaningful opportunity of hearing, violates the mandate of Section 29(2) and is unjust.

This decision is significant for assessees facing GST registration cancellation for non‑filing of returns, especially where authorities act after an unexplained and prolonged delay.

Background of the Dispute

Parties and Registration Details

  • The petitioner, S R Enterprise, is a partnership firm registered under the GST regime.
  • The firm held GST Registration No. 18ADYFS0183K1ZA.

Trigger for the Show Cause Notice

  • The Proper Officer alleged that the assessee had failed to file returns as required under Section 39 of the Central Goods and Services Tax Act, 2017 (“the Act of 2017”).
  • Based on this allegation, a show cause notice was uploaded on the GST portal on 13.08.2024.

Subsequent Inaction and Sudden Cancellation

  • After issuing the show cause notice dated 13.08.2024, the Proper Officer did not move the matter forward for a considerable period.
  • No hearings, reminders, or further steps followed on the notice.
  • Much later, on 05.02.2026, the officer cancelled the assessee’s GST registration, citing the old notice dated 13.08.2024 as the foundation for the action.
  • The assessee discovered the cancellation when attempts were made to resume filing returns on the portal.

This prompted the assessee to approach the Gauhati High Court, challenging the legality of the cancellation order dated 05.02.2026.

The principal question before the Court was:

Can a GST registration be cancelled on 05.02.2026 solely on the basis of a show cause notice issued on 13.08.2024, when no steps had been taken on that notice for about 18 months, and when multiple financial years and intervening events had passed?

The case thus revolved around the validity of using an old, inaction‑ridden show cause notice as the operative basis for cancellation under Section 29 of the Act of 2017.

Arguments Advanced by the Assessee

Counsel for the assessee raised the following key contentions:

1. Requirement of Opportunity of Being Heard Under Section 29

  • The assessee relied on Section 29 of the Act of 2017, which authorises the Proper Officer to cancel registration but subject to the proviso to Section 29(2).
  • The proviso mandates that an assessee must be given an opportunity of being heard before cancellation.
  • The assessee argued that a meaningful opportunity requires a live, current proceeding, not a mechanical reliance on an old, dormant notice.

2. Effect of Long Delay on the Show Cause Notice