2026 (3) TMI 642 - HC - GST

Retrospective Cancellation requires express notice and supplied supporting material; otherwise cancellation and cryptic orders are unsustainable.

Retrospective cancellation of GST registration requires express proposal in the show cause notice and reasons in the order; absent notice proposing ... Retrospective cancellation of GST registration - no proposal in the show cause notice - supply of supporting documents - non speaking order - opportunity of hearing - natural justice - Whether registration of petitioners could have been cancelled with retrospective effect, even though, it is not so proposed in the show cause notice(s) (Form GST REG-17) issued to petitioners. Retrospective cancellation of GST registration - HELD THAT: - The Court held that although the statute confers power to cancel registration retrospectively, such power cannot be exercised mechanically. A show cause notice must put the assessee on notice of the specific proposal sought to be taken (including any intention to cancel retrospectively) and disclose or supply the material on which the authority relies. An order under the statutory power to cancel with retrospective effect must record reasons and evidence of application of mind; a cryptic or non speaking order that relies on grounds not disclosed in the show cause notice and without reference to supporting material is unsustainable. In the present case there was no proposal for retrospective cancellation in the show cause notice, no supporting documents were supplied to the petitioner, and the impugned order does not reflect consideration of the material or reasons for retrospective cancellation. For these reasons the cancellation order was set aside, while leaving open the authority's power to proceed afresh after serving proper notice and affording an opportunity of hearing in accordance with law. [Paras 9, 10, 11, 13, 15] Impugned cancellation order set aside; respondent authorities may take fresh steps including retrospective cancellation only after serving proper notice disclosing the proposal and material relied upon and affording opportunity of hearing. Jurisdiction to entertain writ despite alternative remedy - Whether the writ jurisdiction could be exercised despite availability of an alternate remedy. - HELD THAT: - The Court rejected the respondents' objection about availability of alternate remedy. It followed authorities recognizing exceptions where the High Court in case of M/s Bansal Casting Vs. Union of India and others [2026 (3) TMI 573 - PUNJAB AND HARYANA HIGH COURT], to the effect that matter like the present would fall within the exceptions as carved out by Hon’ble the Supreme Court in M/s Godrej Sara Lee Ltd. [2023 (2) TMI 64 - SUPREME COURT] and Whirlpool Corporation [1998 (10) TMI 510 - SUPREME COURT] wherein this Court would exercise jurisdiction to interfere in matters despite availability of an alternate remedy. Objection based on availability of alternate remedy repelled; writ jurisdiction rightly exercised in the circumstances. Final Conclusion: The petition is allowed; the cancellation of registration is set aside for failure to disclose a proposal for retrospective cancellation, non supply of supporting material and for being non speaking, with liberty to the authorities to proceed afresh after serving proper notice and affording opportunity of hearing in accordance with law. Issues: (i) Whether registration can be cancelled retrospectively when the show cause notice does not propose retrospective cancellation; (ii) Whether proceedings are vitiated where supportive documents mentioned in the show cause notice were not supplied to the taxpayer; (iii) Whether an order of cancellation that is cryptic and non-speaking is sustainable.Issue (i): Whether registration can be cancelled retrospectively when the show cause notice does not propose retrospective cancellation.Analysis: Section 29 of the Central Goods and Services Tax Act, 2017 permits retrospective cancellation subject to the conditions within the provision. An order cancelling registration with retrospective effect must reflect the reasons and contingencies relied upon and the show cause notice must put the taxpayer on notice of the intention to cancel retrospectively; absent such proposal or material, retrospective cancellation cannot be mechanically applied.Conclusion: Retrospective cancellation is not sustainable where the show cause notice does not propose retrospective cancellation and the order does not disclose reasons for retrospective effect; conclusion favours the assessee.Issue (ii): Whether proceedings are vitiated where supportive documents mentioned in the show cause notice were not supplied to the taxpayer.Analysis: A show cause notice that refers to attached supporting material must either supply that material or identify the material on which action is proposed so that the taxpayer can meaningfully respond; failure to supply or identify such material undermines the fairness of the proceedings.Conclusion: Proceedings are vitiated by non-supply of supportive documents; conclusion favours the assessee.Issue (iii): Whether an order of cancellation that is cryptic and non-speaking is sustainable.Analysis: An order exercising the power under Section 29 must record application of mind and reasons that disclose the factual basis and legal justification for cancellation; an order that is cryptic, lacks reference to material relied upon and does not demonstrate due application of mind is unsustainable.Conclusion: A cryptic and non-speaking cancellation order is unsustainable; conclusion favours the assessee.Final Conclusion: The cancellation order is set aside and respondent authorities are granted liberty to initiate fresh proceedings, including retrospective cancellation only after serving proper notice, supplying supporting material and affording an opportunity of hearing in accordance with law.Ratio Decidendi: An order under Section 29 of the Central Goods and Services Tax Act, 2017 cancelling registration with retrospective effect must be reasoned and the show cause notice must propose the retrospective action and supply or identify the material relied upon; absent these, retrospective cancellation and cryptic non-speaking orders are unsustainable.