GST Demand Quashed: Portal-Only Notice Invalid After Registration Cancellation – Allahabad High Court

Case Overview: Shree Ganesh Infra Vs State of U.P.

The Allahabad High Court, in the matter of Shree Ganesh Infra Vs State of U.P., delivered a significant ruling on the validity of show cause notices served exclusively through the GST portal following the cancellation of an assessee's GST registration. The Court struck down a demand order passed under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017, holding that such service of notice amounted to a breach of natural justice principles.

Background and Material Facts

The assessee, Shree Ganesh Infra, had its GST registration cancelled on 7 November 2020. From that date onwards, no business operations were conducted by the assessee. A considerable period after the cancellation, the tax authorities uploaded a show cause notice on the GST portal. Based on this portal-uploaded notice — and without any alternative mode of communication being adopted — the Deputy Commissioner, Sector-02, State Tax Office, Hiran Nagar, Unnao, proceeded to pass a demand order dated 7 August 2024 under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017.

The assessee, aggrieved by this demand order, challenged it before the Allahabad High Court by way of a writ petition filed under Article 226 of the Constitution of India.

The central question before the Court was:

Whether a demand order under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017 could be legally sustained when the show cause notice preceding such an order was served solely through the GST portal, after the assessee's GST registration stood cancelled?

This issue touches upon a recurring procedural concern in GST enforcement — the adequacy of electronic notice through the portal in circumstances where an assessee no longer has an active registration and, consequently, no longer monitors the portal.

Arguments Advanced by the Assessee

The assessee's counsel, Sri Nishendra Kumar Pandey, put forth the following key arguments before the Court: