Judicial Intervention Quashes Ambiguous GST Notice, Restores Taxpayer's Registration Due to Procedural Deficiencies in Section 29

HC invalidated a vague SCN and subsequent GST registration cancellation order against a taxpayer. The court found the original notice lacked specific details about alleged violations, rendering it legally deficient. HC set aside both the SCN and cancellation order, directing authorities to issue a proper notice if warranted, and mandated immediate restoration of the taxpayer's GST registration.

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Issues involved:
The issues involved in this case are the validity of a Show Cause Notice (SCN) calling for cancellation of GST registration and the subsequent order cancelling the registration due to lack of response from the taxpayer.

Validity of Show Cause Notice (SCN):
The petitioner challenged a Show Cause Notice (SCN) dated 03.12.2020 which called for the cancellation of their GST registration. The SCN alleged that registration was obtained through fraud, wilful misstatement, or suppression of facts. The petitioner was directed to respond within seven working days but the notice lacked specific details regarding the alleged violations. The High Court held that the vague nature of the SCN made it impossible for the petitioner to provide a meaningful response. It was emphasized that a show cause notice must clearly state the reasons for any adverse action proposed. As a result, the High Court set aside the SCN.

Cancellation of GST Registration:
Following the SCN, an order was passed on 05.01.2021 cancelling the petitioner's GST registration on the grounds that the taxpayer did not respond to the SCN. The High Court noted that the impugned order did not provide any specific reason for the cancellation apart from the lack of response. Since the SCN itself was vague and inadequate, the Court held that the order cancelling the registration was unjustified. Consequently, the High Court set aside the order cancelling the GST registration and directed for its immediate restoration.

Disposition:
The High Court disposed of the petition by setting aside both the Show Cause Notice and the order cancelling the GST registration. It was clarified that while the registration would be restored, the authorities could issue a fresh show cause notice and take appropriate action in accordance with the law.

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