Non-speaking GST REG-05 cancellation order quashed for violating natural justice; merits left open in fresh proceedings

HC allowed the writ petition challenging rejection of cancellation of GST registration in Form GST REG-05. It held the impugned order dated 30.11.2024 to be a non-speaking order violating principles of natural justice, as the only ground assigned was that the reply was "not satisfactory" without reasons or application of mind. The order was quashed and set aside on this limited ground. HC declined to examine the merits of the subsequent show cause notice dated 28.04.2025, leaving it open to the petitioner to raise all contentions in those ongoing proceedings.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the rejection of the application for cancellation of registration by the tax authority was in accordance with law.

1.2 Whether subsequent initiation of proceedings for cancellation of registration ab initio rendered the challenge to the rejection order infructuous.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of rejection of application for cancellation of registration

Interpretation and reasoning

2.1 The Court confined itself to examining whether the order dated 30.11.2024 rejecting the application for cancellation of registration was legally sustainable, without entering into the merits of the petitioner's claim for cancellation from the date of the Agreement.

2.2 On perusal of the impugned order, the Court noted that the only reason recorded by the authority was that the reply filed by the petitioner had been examined and was "not found to be satisfactory". No further reasoning, basis, or consideration of the material on record was disclosed.

2.3 The Court held that such an order is a "non-speaking order" as it does not disclose any intelligible reasons or grounds for rejection, and therefore suffers from a legal infirmity.

Conclusions

2.4 The order dated 30.11.2024 rejecting the petitioner's application for cancellation of registration is a non-speaking order and is not in accordance with law.

2.5 The impugned order dated 30.11.2024 is quashed and set aside on the ground of being a non-speaking order.

Issue 2: Effect of subsequent proceedings for cancellation ab initio on maintainability of the petition

Interpretation and reasoning

2.6 The State contended that issuance of a subsequent show-cause notice dated 28.04.2025 in Form REG-17 proposing cancellation of registration ab initio rendered the present petition infructuous, as the authorities had already initiated separate proceedings.

2.7 The Court rejected this contention, holding that the illegality attached to the impugned non-speaking order would not be cured by the mere issuance of a subsequent show-cause notice. The defect in the earlier order remained a live issue requiring adjudication.

2.8 The Court clarified that it was not adjudicating the validity or merits of the subsequent show-cause notice dated 28.04.2025 and that such proceedings would be independently adjudicated by the competent authority.

Conclusions

2.9 The petition does not become infructuous merely because proceedings for cancellation of registration ab initio have been initiated by issuance of a subsequent show-cause notice.

2.10 The petitioner is at liberty to raise all available contentions before the authority in the proceedings arising from the notice dated 28.04.2025, including issues relating to the effective date and nature of cancellation.

2.11 The Court's interference is confined to quashing the non-speaking rejection order dated 30.11.2024, with no opinion expressed on the merits of the pending cancellation proceedings.

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