Retrospective Cancellation requires prior notice of retrospective effect and disclosure of relied material; failure vitiates the order.

Retrospective cancellation of GST registration requires that the show cause notice expressly propose retrospective effect and disclose the material relied upon; absent such proposal and disclosure, and where the cancellation order is cryptic, non speaking or shows no application of mind, the order is unsustainable. Authorities must supply supporting documents, record reasons demonstrating due application of mind and afford an opportunity of hearing before invoking retrospective consequences; failure to do so mandates setting aside the cancellation while preserving the authority's right to recommence proceedings after proper notice and disclosure.

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Issues: (i) Whether registration under the Central Goods and Services Tax Act, 2017 can be cancelled with retrospective effect where the show cause notice does not propose retrospective cancellation; (ii) Whether an order of cancellation is unsustainable where supporting documents relied upon are not supplied, and the cancellation order is cryptic/non speaking and shows no due application of mind.

Issue (i): Whether registration under the Central Goods and Services Tax Act, 2017 can be cancelled with retrospective effect where the show cause notice does not propose retrospective cancellation.

Analysis: The Court examined Section 29 of the Central Goods and Services Tax Act, 2017 and the powers to cancel registration retrospectively, and considered authorities emphasising that retrospective cancellation is permissible only upon specific contingencies and that both the show cause notice and the consequent order must reflect the proposal and reasons for retrospective effect. The Court noted that the show cause notice did not propose retrospective cancellation nor supply the material relied upon, and that principles of fair procedure require notice of the specific action proposed so that the affected person can meet the case.

Conclusion: Registration cannot be validly cancelled with retrospective effect where the show cause notice does not propose retrospective cancellation and the affected person was not put on notice of the retrospective character of the action. This conclusion is in favour of the assessee.

Issue (ii): Whether an order of cancellation is unsustainable where supporting documents relied upon are not supplied, and the cancellation order is cryptic/non speaking and shows no due application of mind.

Analysis: The Court considered the content of the show cause notice and the cancellation order, and applicable rules (including Rule 21 and Rule 22 of the Central Goods and Services Tax Rules, 2017), finding that the order merely reproduced the notice without identifying or discussing the material basis for cancellation or demonstrating application of mind. The Court applied settled principles that a quasi judicial authority must act fairly, disclose the material relied upon where indicated, afford an opportunity of hearing, and record reasons especially when invoking retrospective consequences; absence of such reasoning and disclosure renders the order vitiated.

Conclusion: The cancellation order is unsustainable where supporting documents were not supplied, and the order is cryptic/non speaking and shows no due application of mind. This conclusion is in favour of the assessee.

Final Conclusion: The writ petition is allowed; the impugned cancellation order is set aside, subject to the authorities being free to recommence proceedings or recover dues in accordance with law after serving proper notice, supplying material relied upon and affording an opportunity of hearing.

Ratio Decidendi: Retrospective cancellation under Section 29 of the Central Goods and Services Tax Act, 2017 requires that the show cause notice propose retrospective effect and that any order of retrospective cancellation state reasons and demonstrate due application of mind; failure to supply supporting documents or to record reasons and provide proper notice renders the cancellation order unsustainable.

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