2026 (2) TMI 1149 - HC - GST

Material particulars in show cause notices: lack of specific tax period, invoices or suppliers vitiated cancellation and revocation orders.

The HC found the show-cause notice legally deficient for failing to disclose material particulars (tax period, invoices, suppliers, quantification), ... Vagueness and failure to disclose particulars in show cause notice - principles of natural justice in tax proceedings - cancellation of GST registration under Rule 21(e) for availing ineligible input tax credit - independent exercise of quasi judicial power and prohibition on acting under dictation - non speaking order and pre determination in revocation proceedings - Vagueness and failure to disclose particulars in show cause notice - principles of natural justice in tax proceedings - HELD THAT:- A bald reproduction of the statutory provision does not satisfy the requirement of “due notice”. The petitioner, in its reply dated 19.08.2025, specifically objected to the vagueness of the allegation and asserted that, in the absence of particulars: tax period, invoices, suppliers, and quantum, it was impossible to furnish an effective response. An opportunity of hearing is not an empty formality; it must be meaningful. The failure to disclose the basic material on which the authority proposes to act renders the notice arbitrary and unsustainable. There is nothing on record to indicate that the proper officer independently evaluated the material or formed a satisfaction based on reasons of his own. Independent exercise of quasi judicial power and prohibition on acting under dictation - cancellation of GST registration under Rule 21(e) for availing ineligible input tax credit - HELD THAT:- There is nothing on record to indicate that the proper officer independently evaluated the material or formed a satisfaction based on reasons of his own. The law, in this regard, is well settled. In Orient Paper Mills [1967 (3) TMI 47 - SUPREME COURT] the Hon’ble Apex Court held that when a statute vests quasi-judicial power in an authority, that authority must exercise the power independently, and cannot act under the dictation of a superior administrative authority. Such a principle is not an administrative courtesy; it is a constitutional imperative flowing from the rule of law. The discretion conferred by the statute cannot be surrendered to another. Non speaking order and pre determination in revocation proceedings - principles of natural justice in tax proceedings - HELD THAT:- The final order dated 31.10.2025, rejecting the revocation application, reproduces verbatim so called reasons contained in the earlier communication. There is no independent reasoning. There is no analysis of whether the alleged discrepancy in GSTR-2B, assuming it exists, satisfies the statutory conditions under Section 16(2) or attracts the rigour of Rule 21(e). The act provides adequate machinery for assessment, adjudication and recovery. To cancel registration solely on the basis of an interim investigation report, without furnishing particulars and without independent satisfaction, amounts to obstructing the statutory process. In view thereof, the impugned show-cause notice dated 10.09.2025, order of cancellation dated 25.08.2025 and order dated 31.10.2025 are set aside. The petitioner’s registration shall stand restored forthwith. It is, however, opined to the authority under the GST Act, 2017 to initiate fresh proceeding in accordance with law, if so advised, by issuing a detailed show-cause notice specifying the precise allegations; the tax period involved; the invoices and the suppliers relied upon and the quantification of the alleged ineligible credit and by affording the petitioner a reasonable opportunity of hearing. The writ petition is allowed as indicated hereinabove. Issues: (i) Whether the show-cause notice dated 10.09.2025 was vitiated by vagueness and non-disclosure of material particulars; (ii) Whether the order dated 25.08.2025 cancelling GST registration was passed under dictation and without independent exercise of quasi-judicial power; (iii) Whether the order dated 31.10.2025 rejecting the application for revocation was a non-speaking order reflecting pre-determination.Issue (i): Whether the show-cause notice dated 10.09.2025 was vitiated by vagueness and non-disclosure of material particulars.Analysis: The notice merely recited statutory language alleging availing of input tax credit in violation of Section 16 of the Central Goods and Services Tax Act, 2017 without specifying tax period, invoices, suppliers or quantification. Section 16 and Rule 21(e) require that a notice enabling meaningful response must disclose the material facts forming the basis of proposed action. The absence of particulars prevented effective response and undermined the requirements of due notice and principles of natural justice.Conclusion: Issue (i) decided in favour of the assessee.Issue (ii): Whether the order dated 25.08.2025 cancelling GST registration was passed under dictation and without independent exercise of quasi-judicial power.Analysis: The sequence shows an investigative request dated 08.08.2025 preceding the cancellation order, with no record of independent evaluation or reasoned satisfaction by the authority under Section 29 of the Central Goods and Services Tax Act, 2017 read with Rule 21(e) of the Central Goods and Services Tax Rules, 2017. Quasi-judicial power must be exercised on the basis of independent application of mind and objective satisfaction of jurisdictional facts; subordination to an investigative dictum indicates mechanical exercise of power and imperils constitutional and statutory safeguards.Conclusion: Issue (ii) decided in favour of the assessee.Issue (iii): Whether the order dated 31.10.2025 rejecting the application for revocation was a non-speaking order reflecting pre-determination.Analysis: The purported show-cause on revocation and the final rejection reproduced the interim investigative findings verbatim, declaring liability to reject while inviting explanation. There was no independent reasoning addressing whether the alleged discrepancy met the statutory threshold under Section 16(2) or warranted cancellation under Rule 21(e). Such repetition of investigative conclusions without reasoning amounts to a non-speaking order and indicates pre-determination.Conclusion: Issue (iii) decided in favour of the assessee.Final Conclusion: The impugned show-cause notice, cancellation order and order rejecting revocation are set aside; registration is to be restored and fresh proceedings, if any, must comply with statutory requirements by issuing a detailed notice and affording a reasonable opportunity to respond.Ratio Decidendi: A quasi-judicial authority exercising power to cancel GST registration must independently apply its mind and issue a detailed notice disclosing material particulars (tax period, invoices, suppliers, quantification) so as to afford meaningful opportunity of hearing; mechanical reliance on an investigative directive or issuance of non-speaking orders reflecting pre-determination vitiates the exercise of such power.