GST registration cancellation for vague show cause notice challenged; retrospective cancellation quashed and appeal order set aside

Cancellation of GST registration based on a Show Cause Notice lacking specificity on retrospective effect, quantum and period of unpaid duty raises procedural fairness concerns; a vague Show Cause Notice denies adequate opportunity to reply, impairing the ability to contest retrospective cancellation, and thus breaches principles of natural justice. Where delayed payment could be recovered with interest, absence of precise allegations as to duty and period undermines the validity of cancellation. The impugned retrospective cancellation order and the appellate dismissal were set aside, and the writ was partly allowed to the extent that the retrospective cancellation was quashed.

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Issues: Whether the order cancelling the petitioner's GST registration with retrospective effect is sustainable where the Show Cause Notice is vague and does not specify the period or quantum of tax sought to be recovered, and whether the impugned appellate order rejecting the appeal as time-barred can be sustained.

Analysis: Section 29 of the GST statute empowers cancellation of registration, including retrospective cancellation. On the facts, the Show Cause Notice did not specify the period for which tax was alleged to be unpaid nor state whether cancellation would be retrospective; the petitioner therefore lacked sufficient particulars to mount an effective reply, impairing the opportunity of hearing guaranteed by principles of natural justice. Although the appeal was time-barred, the absence of adequate particulars in the Show Cause Notice rendered the substantive cancellation vulnerable to challenge. The Court exercised supervisory jurisdiction to test whether the statutory power was exercised consistent with the requirements of fair hearing and adequate notice, and considered remedial directions short of outright affirmation of the impugned orders.

Conclusion: The order cancelling the petitioner's GST registration with retrospective effect is quashed and set aside and the appellate order rejecting the appeal as time-barred is set aside; the matter is remitted for issuance of a modified Show Cause Notice and fresh adjudication allowing the petitioner an opportunity to reply.

Ratio Decidendi: A Show Cause Notice which fails to specify the period or quantum of alleged tax and whether cancellation is to operate retrospectively deprives the affected party of a meaningful opportunity of hearing and will vitiate a retrospective cancellation under Section 29 of the GST law.

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