GST Registration Cancellation: Patna High Court Steers Assessee Toward Appellate Tribunal Under Section 112 CGST Act
Background and Overview
The Patna High Court recently dealt with a writ petition filed by Vaishnavi Builder and Developer challenging a series of adverse GST proceedings, including a show-cause notice, an ex-parte cancellation order, and a subsequent appellate order that confirmed the cancellation. Rather than adjudicating on the substantive merits of the dispute, the Court disposed of the petition by granting the assessee liberty to pursue the appropriate statutory remedy under Section 112 of the Central Goods and Services Tax Act, 2017.
This ruling carries significant practical implications for GST assessees who face ex-parte cancellation of registration and are contemplating direct recourse to High Courts through writ petitions. The case reaffirms the principle that constitutional courts generally refrain from bypassing the statutory appellate hierarchy, especially when an adequate legal remedy is available under the GST framework.
Facts of the Case
The Show-Cause Notice and Ex-Parte Cancellation
The dispute originated with a show-cause notice dated 09.05.2023, bearing Reference No. ZA100523023985R, issued in Form REG-17/31 by the jurisdictional GST authority (Respondent No. 5) for cancellation of the petitioner's GST registration.
Following the issuance of this notice, the GST authority passed an ex-parte order dated 15.01.2024, bearing Reference No. ZA100124037570A, cancelling the GST registration of the assessee. The operative portion of the cancellation order read:
"This has reference to show cause notice issued dated 09.05.2023. The effective date of cancellation of your registration is 15.01.2024."
The assessee's primary grievance was that this cancellation order was a non-speaking order — it provided no reasons, no findings, and no basis for the decision to cancel registration. Furthermore, the assessee contended that no sufficient opportunity of hearing was afforded before passing the order, rendering the entire proceeding violative of the principles of natural justice.
Impact on the Assessee's Business Operations
The consequences of the cancellation were operationally severe for the assessee. The petitioner had duly filed GST returns up to December 2023 and had also paid the applicable taxes along with late fees. However, from January 2024 onwards, the GST portal disabled further return filing for the assessee, owing to the cancellation of registration effective 15.01.2024. This effectively froze the assessee's compliance obligations in a state of limbo — unable to file returns, unable to regularize its tax position, and unable to carry on normal business operations that required a valid GST registration.