High Court quashed order cancelling GST registration on the ground of obtaining two separate registration for the same nature of business.
In a recent judgment, Hon’ble Allahabad High Court quashed order cancelling GST restoration on the ground of violation of section 25(2) for obtaining two registration for the same nature of business.
ABCAUS Case Law Citation:
4485 (2025) (03) abcaus.in HC
In the instant case, the assessee/Petitioner had filed a Writ Petition challenging the order passed by GST Appellate Authority and order passed by Assistant Commissioner under Section 30 of UPGST Act (Revocation of cancellation of registration), and the order passed by Assistant Commissioner under Section 29 (2) of UPGST Act (Cancellation or suspension of registration).
The petitioner was a private limited company having separate GST registrations of its two business verticals in India. A show cause notice (SCN) was issued to the petitioner in Form GST REG -17 under Rule 22 (1) and sub rule (2A) of Rule 21 A of UP GST Rules 2017 proposing to cancel the registration of the petitioner on the premise that the dealer had contravened Section 25 (2) of GST Act 2017 on the ground that the Petitioner could not have two separate registration within the same State or Union territory and thereafter the registration of the petitioner was suspended.
In response to the show cause notice, the petitioner has submitted online reply for seeking revocation of the GST registration, but order of cancellation of registration was passed in Form REG 19 under Rule 22 (3) of the Rules. Thereafter the petitioner submitted revocation application explaining the detailed reasons thereof. However, being not satisfied with the same, the revocation application was rejected. Aggrieved by said order, the petitioner filed an appeal but the same was also dismissed.
Before the Hon’ble High Court the petitioner submitted that under the GST Act, the power to cancel the registration has been granted under Section 29 (2) read with Rule 21. That the respondent authorities being the quasi judicial authority have to act in accordance with law as mandated under GST Act as well as the Rules. There is no provision prescribed under Section 25 of the Act, which empower the authorities to cancel the registration without whispering a word that issue in hand falls under the conditions prescribed in Section 29 (2) of the UPGST Act.
The petitioner further submitted that a show cause notice was issued for cancellation of registration in contravention of the provisions of Section 25 (2) of the Act but for the first time, the appellate Court had passed the order on a new ground to which the petitioner was never put to notice or opportunity of hearing, before passing the order.
The Hon’ble High Court observed that the cancellation of registration is a serious act. In other words, by cancelling the registration, a person looses his opportunity to earn his bread and butter.
The Hon’ble High Court observed that while issuing the show cause notice for cancellation of registration, neither any date has been fixed for submission of reply nor any date was fixed for personal hearing of the petitioner. The authorities had issued a notice without any allegation or proposed evidence against the petitioner showing as to how the violation of Section 25 (2) of the Act has been made by the petitioner which empowers the authorities to cancel the registration of the petitioner. Further, the impugned order had not referred a word satisfying the test as required under Section 29 of the Act thus without there being any violation as prescribed under Section 29 of the Act, the registration of the petitioner had been cancelled.
The Hon’ble High Court further observed that while deciding the appeal of the petitioner, altogether new grounds have been taken. The record further showed that the petitioner was never confronted with the material being used against the petitioner. The respondent authorities being the quasi judicial authority are expected and duty bound to discharge its duties strictly in accordance with the provisions of the Act as well as the Rules framed under the GST regime.
The Hon’ble High Court observed that In the present case, the appellate authority has rejected the appeal on the ground that while applying for registration, HSN / SAC code has been disclosed, therefore, business undertaken by the petitioner under two different registrations are one and same cannot be bifurcated into two business verticals.
The Hon’ble High Court further noted that the conditions have been prescribed under Rule 21 for cancellation of registration, which was not followed in the impugned order but only on the basis of reflection of HSN / SAC code in the registration application of the petitioner under the GST, the registration was cancelled. In other words, the grounds mentioned under Rule 21 of the Act was not tested by the respondent authorities, which empowers the cancellation of registration.
Further, the Hon’ble High Court observed that it was not the case of the revenue that the petitioner had obtained the registration by committing any breach of the conditions mentioned under Section 29 (2) read with Rule 21 of the GST Act as well as the Rules.
The Hon’ble High Court held that the impugned orders cannot be sustained in the eyes of law and same were quashed.
Accordingly, the writ petition was allowed. The GST authorities were directed to restore the registration of the petitioner forthwith.
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