GST registration cancellation cannot rest only on suppliers' cancelled registrations without findings on genuine input tax credit transactions.

Cancellation of GST registration based only on the cancelled status of suppliers' registrations was unsustainable where the authority recorded no cogent finding on the petitioner's tax invoices, e-way bills, ledger statements or bank statements. The Bombay High Court held that cancellation of a supplier's registration, by itself, could not justify cancellation of the petitioner's registration without tangible material showing the petitioner's involvement in an established illegality connected to the claimed input tax credit. The absence of independent findings on the genuineness of the petitioner's transactions showed non-application of mind and arbitrariness. The cancellation order was set aside and the matter remanded for fresh adjudication after hearing the petitioner.

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Issues: Whether the cancellation of GST registration based on the cancelled status of suppliers' registrations, without a cogent finding on the petitioner's documents and the genuineness of the input tax credit claim, was sustainable and whether the matter required remand for fresh consideration.

Analysis: The impugned order relied substantially on the alleged fraudulent chain of transactions and the cancellation of suppliers' registrations, but it did not record a clear finding on the tax invoices, e-way bills, ledger statements and bank statements produced by the petitioner. Cancellation of a supplier's registration, by itself, could not justify cancellation of the petitioner's registration unless supported by tangible material showing the petitioner's involvement in an established illegality in relation to the claimed input tax credit. The absence of such independent findings on the petitioner's bona fide transactions and the factual trail rendered the order arbitrary and showed non-application of mind.

Conclusion: The cancellation order was set aside and the proceedings were remanded for fresh adjudication after granting the petitioner an opportunity of hearing.

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