Cancellation of GST registration quashed as ground in notice & order passed were different

Cancellation of GST registration quashed as notice was sent on the ground of non filing of return but cancellation was done on a different ground

In a recent judgment, Allahabad High Court has quashed the order cancelling GST registration when show cause notice was given for cancellation of registration on the ground that the returns have not been filed continuously for six months; whereas, the order of cancellation of registration was passed on a different ground that comparison of return as per Rule 21-A(2-A) was not possible.

ABCAUS Case Law Citation:
4376 (2025) (01) abcaus.in HC

The Petitioner was a Partnership firm having family members a partner. The Partnership firm (Petitioner) had filed a Writ Petition against the order passed by the GST authorities cancelling the GST registration of the firm.

It was submitted that one of the partners of was diagnosed with cancer and her remaining family members who were also partner of the firm got involved in the treatment and therefore, the business was neglected, which resulted in non-filing of GSTR-3B & GSTR-1 within the time limit as prescribed under the GST Act.

Thereafter, a notice was issued by the GST Department for cancellation of the registration on the ground that the petitioner had failed to continuously furnish returns for a period of six months. The notice was issued through e-mail and as the other partners were involved in the treatment, they could not check e-mail.

Thereafter, The GST Department vide impugned order cancelled the registration of the petitioner for the reason of Rule 21A(2)(a) of the GST Rules in a case where a comparison of the returns furnished with the details of outward supplies furnished by suppliers in Form GSTR-1 etc. show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules. 

It was further submitted that the petitioner subsequently deposited the tax and filed pending returns along with late fees and after deposit of tax, along with interest. Thereafter, on-line appeal was preferred but the appeal of the petitioner was dismissed vide impugned order.

The petitioner thus submitted that cancellation of registration had serious consequence resulting in serious prejudice to the right and interest of the petitioner. Therefore, passing an order in gross violation of the principles of natural justice was unsustainable in the eyes of law

The Petitioner submitted that if the returns were not filed by the petitioner for the last six months, comparison of returns as per Rule 21-A(2)(a) was not possible and therefore, the findings recorded in the impugned cancellation order were perverse.

The Petitioner further submitted that once the tax, along with interest as well as returns had been filed, the registration of the petitioner was liable to be restored. In support of her submission, the Petitioner relied upon the judgement of the Hon’ble High Court.

The Hon’ble High Court observed that admittedly, the notice was given for cancellation of registration on the ground that the returns had not been filed continuously for six months; whereas, the order of cancellation of registration had been passed on a different ground that comparison of return as per Rule 21A(2)(a) was not possible,  for which the petitioner was never put to any notice and therefore, the order of cancellation of registration was in gross violation of principles of natural justice, which cannot be sustained in the eyes of law. Further, the appellate court had not passed the order on merit and therefore, merger will not apply.

The Hon’ble High Court observed its various judgments wherein registration was restored due to the violation of the principles of natural justice. In view of the facts & circumstances of the case as well as the law laid down by the Court, the Hon’ble High Court held that the impugned order of cancellation of registration of the petitioner cannot be sustained in the eyes of law.

Accordingly, the impugned order was quashed and the writ petition was allowed. The Department was directed to restore the registration of the petitioner forthwith.

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