GST registration cancellation must rest on statutory grounds, and not external directions or unreasoned orders passed without notice.

Cancellation of GST registration must rest on the specific statutory grounds and procedure under GST law, not on external directions issued under the Environment (Protection) Act, 1986. The Court found that the registration cancellation was unsustainable because the GST authority had not independently satisfied the requirements of Section 29 read with Rule 21 of the U.P. GST framework, and environmental directions could not substitute for statutory compliance. The impugned cancellation and appellate orders were also vitiated by absence of effective notice, lack of reasoned findings, internal inconsistency, and breach of natural justice. The cancellation and appellate affirmation were quashed, and restoration of GST registration with consequential relief was directed.

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Issues: (i) Whether cancellation of GST registration could be sustained on the basis of directions issued by the Taj Trapezium Zone authority and the Environment (Protection) Act, 1986, when the statutory requirements under the GST law were not independently satisfied. (ii) Whether the impugned cancellation and appellate orders were vitiated for want of notice, absence of reasons, and violation of natural justice.

Issue (i): Whether cancellation of GST registration could be sustained on the basis of directions issued by the Taj Trapezium Zone authority and the Environment (Protection) Act, 1986, when the statutory requirements under the GST law were not independently satisfied.

Analysis: The cancellation of registration had to be tested on the touchstone of Section 29 read with Rule 21 of the U.P. GST framework. The environmental statute empowered directions for protection of the environment, but those directions could not be blindly transplanted into GST cancellation proceedings. The business of coal trading, as noticed in the order, was not treated as an activity generating environmental hazard in the manner contemplated by the environmental directions relied upon. A taxing statute must be construed strictly, and no assumed deficiency can be supplied by importing provisions from another enactment. The GST authority was therefore required to act within the four corners of the GST law and not merely act on external administrative directions.

Conclusion: The cancellation could not be sustained on the basis of the TTZ or environmental directions, and the issue was decided in favour of the assessee.

Issue (ii): Whether the impugned cancellation and appellate orders were vitiated for want of notice, absence of reasons, and violation of natural justice.

Analysis: The record showed that no effective order was passed on the date fixed, no subsequent notice fixing the later date was issued, and the cancellation order did not disclose a coherent reasoned basis. The order also contained an internal inconsistency regarding whether a reply had been filed, and the supplementary appendix relied upon later in the counter affidavit could not cure the original defect because fresh reasons cannot be added through affidavit. In addition, there was no finding establishing any statutory violation by non-maintenance of accounts that could justify cancellation. The appellate order also could not rescue the defect.

Conclusion: The impugned orders were vitiated by breach of natural justice and lack of a sustainable statutory basis, and the issue was decided in favour of the assessee.

Final Conclusion: The cancellation of registration and the appellate affirmation were quashed, and restoration of the GST registration was directed with consequential relief.

Ratio Decidendi: Cancellation of GST registration must rest on the specific statutory grounds and procedure under the GST law itself; external directions or later-added reasons cannot substitute for a reasoned, lawful order passed after due notice and hearing.

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