GST Registration Cancellation Overturned: Defective Show Cause Notice Invalidates Retrospective Order Under Natural Justice Principles

The HC found the GST registration cancellation invalid due to defective Show Cause Notice lacking specific details about alleged fraud. The SCN violated natural justice principles by not providing intelligible reasons for retrospective cancellation. The court set aside the cancellation order, directing immediate restoration of registration while preserving respondents' right to initiate future proceedings with proper legal compliance.

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Issues:
Impugning the cancellation of Goods and Services Tax (GST) registration with retrospective effect, validity of Show Cause Notice (SCN) for cancellation, propriety of the reasons for cancellation, compliance with principles of natural justice.

Analysis:
The petitioner challenged the cancellation of their GST registration with retrospective effect from 22.04.2018 through a petition, contending that the Show Cause Notice (SCN) lacked specific details regarding the alleged fraud, misstatement, or suppression of facts. The petitioner's registration was suspended upon issuance of the SCN, which also directed the petitioner to reply within seven days and appear before the proper officer. Subsequently, the petitioner applied for revocation of the cancellation, but the application was rejected, citing the reason for rejection as the need to upload KYC documents and join an investigation with the Anti Evasion branch. The petitioner argued that the requirement for a 'No Objection Certificate' (NOC) was unsupported by any statutory provision.

The Court noted that the SCN failed to provide intelligible reasons for the proposed cancellation, as it did not specify details of the alleged fraud, misstatement, or suppressed facts. The purpose of a show cause notice is to enable a meaningful response, which was not possible in this case due to the lack of specific details. The impugned order, without proper details, cancelled the registration retrospectively, violating the principles of natural justice. Consequently, both the SCN and the impugned order were set aside, directing the restoration of the petitioner's GST registration immediately.

The Court clarified that while the order restores the registration, it does not prevent the respondents from initiating further proceedings against the petitioner for statutory violations, but such actions must adhere to legal principles. The petition was disposed of accordingly, emphasizing the importance of due process and providing detailed reasons when taking administrative actions such as cancellation of GST registration.

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