GST registration cancellation fails where inspection and verification ignore Rule 25 and fair opportunity requirements

A GST registration cancellation based on alleged inspection was found unsustainable because the verification was not carried out in the taxpayer's presence, no photographs were taken, and the verification report was not uploaded as required by Rule 25 of the CGST Rules, 2017. The Court held that the show-cause notice itself lacked a lawful basis in these circumstances and also noted the absence of a fair opportunity before cancellation. The show-cause notice and the cancellation order were set aside.

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Issues: Whether the show-cause notice and consequential order cancelling GST registration could be sustained when the inspection and verification were carried out contrary to Rule 25 of the Central Goods and Services Tax Rules, 2017.

Analysis: The impugned action was founded on an alleged inspection of the petitioner's premises. The verification was not conducted in the presence of the petitioner, no photographs were taken, and the verification report was not uploaded as contemplated by Rule 25 of the Central Goods and Services Tax Rules, 2017. In these circumstances, the basis of the show-cause notice itself was found to be legally unsustainable. The Court also noted the absence of compliance with the requirement of a fair opportunity before cancellation of registration.

Conclusion: The show-cause notice and the order cancelling registration were set aside.

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