Notice Requirement: cancellation on unpleaded grounds invalid - fresh show cause with detailed reasons and reply opportunity required.

Cancellation of GST registration predicated on grounds not disclosed in the show cause notice was held invalid because a show cause notice must specify the grounds relied upon to give the noticee an opportunity to reply; passing cancellation or appellate orders on unpleaded grounds denies that opportunity and is unsustainable. The court set aside the impugned cancellation and appellate orders and granted liberty to the department to issue a fresh show cause notice stating detailed reasons, allow the noticee to file a reply, and thereafter pass speaking orders based on the pleaded grounds.

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Issues: Whether cancellation of GST registration and its appellate confirmation are vitiated where the show cause notice did not specify the ground on which cancellation was ultimately ordered, and whether the impugned orders must be set aside with liberty to issue a fresh show cause notice stating detailed reasons.

Analysis: The proceedings record that the show cause notice was issued on the premise of registration obtained by fraud, willful misstatement or suppression of facts, whereas the cancellation order proceeded on the basis of circular trading and non-payment of tax. The appellate order did not adjudicate the specific contention that the cancellation relied upon a ground not pleaded in the show cause notice but merely observed that the ground was permissible under Section 29(2) of the Act. Prior final decision in a connected matter where identical procedural defect existed resulted in setting aside the appellate order and directing issuance of a fresh show cause notice with detailed reasons so the noticee could respond and speaking orders be passed. A show cause notice is foundational to subsequent adjudication and must disclose the grounds relied upon so that the noticee has an opportunity to reply; passing orders on unpleaded grounds denies that opportunity and is unsustainable.

Conclusion: Impugned cancellation and appellate orders are set aside; liberty is granted to the department to initiate fresh proceedings by issuing a show cause notice specifying detailed reasons, permitting the noticee to file a reply, and thereafter passing appropriate speaking orders.

Ratio Decidendi: An order cancelling GST registration premised on grounds not disclosed in the show cause notice is invalid for denial of the statutory requirement of fair opportunity to answer, and a fresh show cause process with detailed reasons must be afforded before passing speaking orders.

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