Reasoned GST cancellation orders are mandatory; absence of reasons made the cancellation unsustainable despite delay in writ challenge.

Cancellation of GST registration under Section 29 of the CGST Act and Rule 22 of the CGST Rules must be supported by recorded reasons in the notice and in the final order; a mere reference to the show cause notice, without a speaking order, is a breach of fair procedure and renders the cancellation unsustainable. Delay in approaching the writ court did not defeat relief because the primary defect was the statutory illegality in passing a reasonless order. The HC quashed the cancellation, restored the matter to the show cause notice stage, and allowed the taxpayer to respond or regularise compliance in accordance with the statutory procedure.

---

---

Issues: (i) Whether the order cancelling GST registration, passed without recording reasons, was sustainable in law; (ii) whether delay in approaching the writ court justified refusal of relief.

Issue (i): Whether the order cancelling GST registration, passed without recording reasons, was sustainable in law.

Analysis: Cancellation of registration under the CGST framework is governed by Section 29 of the CGST Act, 2017 and the procedure prescribed in Rule 22 of the CGST Rules, 2017. The notice under Rule 22 must state the basis of proposed cancellation, and the consequential order in Form GST REG-19 must disclose the reasons for cancellation. Recording reasons is part of fair procedure and is especially necessary where the order entails adverse civil consequences. An order that merely refers to the show cause notice and states the effective date of cancellation, without assigning any reason, is a non-speaking order and reflects absence of application of mind.

Conclusion: The cancellation order was illegal and liable to be set aside.

Issue (ii): Whether delay in approaching the writ court justified refusal of relief.

Analysis: Although the writ petition was filed belatedly, the Court held that the statutory infraction in passing a reasonless cancellation order was a more serious defect. Where the impugned action is vulnerable for breach of the mandatory requirement of giving reasons, delay by itself does not outweigh the illegality in the order.

Conclusion: The delay did not preclude grant of relief.

Final Conclusion: The cancellation of GST registration was quashed, the matter was restored to the stage of the show cause notice, and the petitioner was permitted to proceed in accordance with the statutory procedure for either replying to the notice or regularising the returns and dues.

Ratio Decidendi: An order cancelling GST registration must be a reasoned, speaking order conforming to the prescribed procedure, and absence of reasons renders the cancellation unsustainable notwithstanding delay in challenging it.

---