Retrospective GST Cancellation Quashed by Himachal Pradesh High Court for Lack of Reasons: Rajat Bansal vs Commissioner of Central Goods & Services Tax
Background and Overview
The Himachal Pradesh High Court recently adjudicated a significant writ petition involving the retrospective cancellation of GST registration, delivering a ruling that reinforces the principle that administrative orders affecting substantive rights must be supported by explicit and cogent reasoning. The case — Rajat Bansal Vs Commissioner of Central Goods & Services Tax — arose from a chain of proceedings initiated by the Central GST Department, culminating in the cancellation of the petitioner's GST registration with retrospective effect from the very date of its original grant.
The judgment carries considerable practical relevance for registered assessees who may face similar departmental actions under Section 29 of the Central Goods and Services Tax Act, 2017 (CGST Act), particularly where cancellation is sought to operate from a date far preceding the order itself.
Facts of the Case
The Petitioner's Business and Registration
The petitioner, Rajat Bansal, was engaged in the business of trading retail and wholesale of milk albumin, cellulose adhesive tape, and allied products through his proprietorship concern M/s Shiv Trading Co., registered at Near Laj Dharm Kanta, SCO 9, Vill. Billanwalli Labana, Salasar Complex, Baddi, Solan, Himachal Pradesh. The firm held a valid GST Registration Certificate bearing Registration No. 02BHEPB4643Q2ZC, granted on 15.03.2022.
Initiation of Proceedings Under Project Anveshan
The proceedings against the petitioner did not originate from any routine audit or complaint. Instead, they were initiated pursuant to Project Anveshan, a targeted exercise undertaken by the Directorate General of Analytics and Risk Management (DGARM). The project employed facial analytics and face-based authentication technology to identify anomalies in digital information submitted at the time of GST registration. During the Second Special Drive against fake registrations, which commenced from 16.08.2024, M/s Shiv Trading Co. was flagged as a suspicious entity and its details were transmitted to the jurisdictional GST authorities.
Physical Verification and Findings
Acting upon DGARM's intelligence input, the department conducted a physical verification of the petitioner's declared principal place of business on 16.10.2024 at approximately 12:00 PM. According to the department's version, the petitioner's firm was not found to be operating from the said premises. Instead, another concern — M/s Maxxon Lifesciences (Prop. Hemant Joshi), bearing GSTIN No. 02ABIPJ4232A1ZI — was allegedly discovered to be functioning from the same address. No signboard or display board of M/s Shiv Trading Co. was found, and neighbours as well as local persons purportedly confirmed that no such entity was operating from that location.
Photographs were taken during the inspection, and a Panchnama dated 16.10.2024 was prepared on the spot in the presence of independent witnesses.
Show Cause Notice and Cancellation Order
Following the physical verification, a Show Cause Notice bearing Reference No. ZA021024006405E was issued on 16.10.2024 in Form GST REG-17 under Section 29 of the CGST Act read with Rule 21 and Rule 22 of the Central Goods and Services Tax Rules, 2017 (CGST Rules). The notice simultaneously suspended the petitioner's registration from the date of its issuance. The petitioner was granted an opportunity to respond and appear for a personal hearing on 23.10.2024.
The petitioner, however, did not file any reply to the Show Cause Notice. Consequently, an Order of Cancellation dated 17.01.2025 (Ref. No. ZA0201250071379) was passed, cancelling the GST registration retrospectively from 15.03.2022 — the very date of the original registration.