GST Registration Cancellation Overturned: Procedural Flaws and Insufficient Evidence Invalidate Regulatory Action Against Petitioner

HC allowed petitioner's challenge to GST registration cancellation. The order was set aside due to procedural irregularities, lack of specific fraud allegations, and insufficient reasoning in the show cause notice. Registration was directed to be restored, with respondent permitted to take lawful statutory steps if warranted.

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Issues Involved:
The judgment involves the cancellation of GST registration based on alleged fraud, wilful misstatement, or suppression of facts without proper reasoning in the show cause notice and subsequent order.

Cancellation of GST Registration:
The petitioner filed a petition challenging the cancellation of their GST registration by the respondent, citing an order passed on 26.10.2023, based on a Show Cause Notice (SCN) dated 18.09.2023. The SCN alleged registration obtained through fraud, wilful misstatement, or suppression of facts. However, the SCN lacked specific details regarding the alleged fraud or misstatement, rendering it insufficient for a meaningful response. The impugned order, devoid of any reasoning, merely referenced the SCN, leading to its setting aside for being void and unreasonable.

Procedural Irregularities:
The petitioner's counsel highlighted a prior Show Cause Notice dated 20.09.2021, proposing the same cancellation reasons as the later SCN. Subsequently, the petitioner's GST registration was canceled on 30.09.2021, and an appeal against this decision was rejected due to delay. Following an application for revocation, the registration was restored on 16.09.2023. The court noted the merit in the argument that once registration is restored, re-cancellation for the same reason is impermissible unless new grounds arise post the initial cancellation.

Judgment and Relief:
The court allowed the petition, setting aside the impugned order and directing the restoration of the petitioner's GST registration. All pending applications were disposed of, with a clarification that the respondent could take lawful steps as per the statute. The judgment emphasized the importance of providing proper reasoning in show cause notices and orders, ensuring transparency and fairness in administrative actions.

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