Patna High Court Quashes GST Registration Cancellation Order for Breach of Natural Justice: Medicana vs Union of India
Overview of the Case
The Patna High Court, in Civil Writ Jurisdiction Case No. 203 of 2025, delivered a significant ruling on 02.05.2025 in the matter of Medicana Vs Union of India (Patna High Court), setting aside both a show cause notice and a cancellation order pertaining to GST registration. The Court found that the entire proceeding was fundamentally flawed — plagued by improper communication of notices, structural defects in the show cause notice, and a cancellation order that was wholly devoid of reasoning. The judgment reinforces the principle that quasi-judicial authorities exercising powers under the Central Goods and Services Tax Act, 2017 are bound by the doctrines of natural justice and must pass speaking orders.
Background and Facts of the Case
The petitioner, M/s Medicana, is a proprietorship firm engaged in the retail sale of medicines, holding a valid GSTIN since July 2017, with its principal place of business located at Jay Kamala Plaza, East Boring Canal Road, Patna. The firm had been operating as a registered dealer under the GST Act, 2017 for several years without issue.
However, due to non-filing of returns during 2023, the concerned authority issued a Show Cause Notice dated 13.11.2023 in Form GST REG-17/31 under Section 29 of the Central Goods and Services Tax Act, 2017, proposing cancellation of the petitioner's GST registration. This notice was merely uploaded on the GST portal and was not communicated through any other mode. Subsequently, an ex parte order dated 15.12.2023 was passed cancelling the registration with effect from 13.11.2023.
Following cancellation, the petitioner found itself in a situation where the GST portal itself prevented the uploading of returns, as the system barred return filing upon cancellation of registration. An application for revocation of cancellation under Section 30 of the CGST Act, 2017 was also filed but did not yield results. Left with no other effective remedy, the petitioner approached the Patna High Court by way of a writ petition without first exhausting the statutory appellate remedy under Section 107 of the CGST Act, 2017.
Reliefs Sought by the Petitioner
The petitioner prayed for the following reliefs before the High Court:
- Quashing of the Show Cause Notice dated 13.11.2023 (Reference No: ZA101123031229A) issued in Form REG-17/31 for cancellation of GST registration.
- Quashing of the ex parte Cancellation Order dated 15.12.2023 (Reference No: ZA1012230354472), which was a non-speaking order that merely stated: "This has reference to show cause notice issued dated 13/11/2023. The effective date of cancellation of your registration is 13/11/2023" — without affording adequate opportunity of hearing.
- Restoration of the petitioner's GST registration with immediate effect, given that returns had already been filed up to November 2023 along with applicable taxes and late fees, and that returns from December 2023 onward could not be filed due to the portal restriction arising from cancellation.
- Any other relief to which the petitioner may be found entitled under law.
Arguments Advanced by the Petitioner
Defective Communication of the Show Cause Notice
The petitioner's counsel argued that the show cause notice was never served through any physical or alternative mode — it was solely uploaded on the GST portal. Given that cancellation of GST registration carries significant civil consequences, including implications under Article 19(1)(g) of the Constitution of India, the notice ought to have been communicated through multiple modes, including at the very minimum, registered post with acknowledgment due.
Structural Defects in the Show Cause Notice
A critical infirmity pointed out was the internal inconsistency in the notice itself:
- The notice granted the petitioner 30 days from the date of service to submit a reply.
- Assuming the notice was uploaded on 13.11.2023, the 30-day period would expire on 12.12.2023.
- Yet, the notice directed the petitioner to appear for personal hearing on 11.12.2023 at 11:00 AM — a date falling before the expiry of the stipulated reply period.
This meant the assessee was being called for hearing before even having the full time to respond, rendering the notice procedurally untenable.