Procedural Flaws Invalidate GST Registration Cancellation, Restoring Taxpayer's Rights Under Proper Legal Scrutiny

The HC found the retrospective cancellation of GST registration invalid due to procedural defects. The Show Cause Notice lacked specificity, and the subsequent order did not provide adequate reasons. The court set aside the cancellation order, restored the Petitioner's registration, and directed compliance with GST rules while allowing tax recovery procedures.

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Issues involved:
The cancellation of GST registration retrospectively without proper notice and reasons.

Summary:

Issue 1: The cancellation of GST registration was challenged by the Petitioner as it was done retrospectively without proper notice or reasons.

- The Show Cause Notice dated 18.07.2023 alleged registration obtained by means of fraud, wilful misstatement, or suppression of facts.
- The Notice did not specify the officer or place for appearance, creating ambiguity.
- The Petitioner was not informed about the possibility of retrospective cancellation, depriving them of the opportunity to object.
- The subsequent order dated 31.07.2023 did not provide reasons for cancellation, merely referencing the Show Cause Notice and effective date.

Issue 2: Lack of details in the Show Cause Notice and the impugned order rendered them unsustainable.

- The absence of specific reasons for retrospective cancellation was noted.
- The cancellation of registration with retrospective effect must be based on objective criteria, not merely due to non-filing of returns.
- Proper satisfaction of the officer is required for retrospective cancellation, considering the consequences on the taxpayer's customers and input tax credit.

Decision: The order dated 31.07.2023 cancelling the GST registration was set aside, and the registration of the Petitioner was restored.

- The Petitioner was directed to fulfill all necessary compliances and file requisite returns as per the Central Goods and Services Tax Rules, 2017.
- Respondents were allowed to take steps for recovery of tax, penalty, or interest due, including retrospective cancellation, in accordance with the law.

Conclusion: The petition was disposed of with the above terms, emphasizing the importance of proper procedure and reasons for retrospective cancellation of GST registration.

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