Case Law Details
A One Industries Vs Central Board of Indirect Taxes & Customs (Punjab and Haryana High Court)
The Punjab and Haryana High Court allowed the writ petition and set aside the show cause notice dated 21.01.2025 issued for cancellation of GST registration because the notice did not inform the petitioner that retrospective cancellation was proposed. Despite the absence of such disclosure in the notice, the authorities cancelled the petitioner’s GST registration retrospectively through an order dated 13.03.2025.
The Court held that the matter was fully covered by its earlier Division Bench judgment in M/s Bansal Casting vs. Union of India and another dated 20.02.2026. In that judgment, the Court had observed that although Section 29 of the CGST Act permits retrospective cancellation of registration, such power can be exercised only upon fulfillment of specified conditions and the order must clearly record reasons for retrospective cancellation.
The Court reiterated that principles of natural justice require that an assessee must be put to notice regarding the precise action proposed against it and the basis for such action. Relying on the Supreme Court judgment in Oryx Fisheries Pvt. Ltd. vs. Union of India, the Court emphasized that a show cause notice must contain the grounds or premises on which action is sought to be taken and must provide a reasonable opportunity to respond.
The Division Bench in Bansal Casting had also held that where retrospective cancellation is proposed, the authorities must specifically mention such proposal in the show cause notice and provide or refer to the supporting material relied upon. In the present case, the respondents were unable to distinguish the applicability of the earlier judgment.
Accordingly, the High Court set aside the show cause notice dated 21.01.2025 while granting liberty to the authorities to initiate fresh proceedings in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
1. Show cause notice dated 21.01.2025 was served upon the petitioner as to why its GST registration be not cancelled but through such show cause notice the petitioner was never informed that its GST registration is sought to be cancelled retrospectively which was done through the cancellation order dated 13.03.2025.
2. In the light of the above, the petitioner’s case is fully covered in its favour by the following observations made in a recent Division Bench judgment of this Court dated 20.02.2026 in CWP-16770-2024-M/s Bansal Casting vs. Union of India and another, wherein it has been held as follows: –
13. Undoubtedly, there is a provision for retrospective cancellation of registration in terms of Section 29 of CGST Act, subject to the provisions as contained therein. It is apposite to note that while such power of retrospective cancellation of registration is definitely conferred, it is apparent that such action can be taken only upon existence of specific contingencies and that an order under Section 29(2) of CGST Act must definitely reflect the reasons for such cancellation with retrospective effect. Furthermore, it is a basic, accepted and settled principle that concerned authority is enjoined upon to put the assessee to notice of the action which is intended to be taken and reasons or the premise on which such action is sought to be taken. Hon’ble the Supreme Court in ORYX Fisheries Pvt. Ltd. Vs. Union of India and others, 2010(13) SCC 427, has held as under:-
“24. It is well settled that a quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating a show cause proceeding. A show cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice.”
14. Thus a show cause notice must contain the basic grounds or premises on which action is sought to be taken. In the present matters, it was incumbent upon authorities to have put petitioners to notice about the proposal to take action against them with retrospective effect and supply or at least mention the material on which reliance was placed. Moreover, once mentioned in show cause notice itself that supporting documents are attached, such material should have been supplied to petitioners.
3. Learned counsel for the respondents have not been able to distinguish the applicability of M/s Bansal Casting’s case (supra) to the petitioner’s case.
4. In the light of the above, we have no hesitation in setting aside the show cause notice dated 21.01.2025. However, the respondents are granted liberty to proceed afresh against the petitioner in accordance with law.
5. The petition is allowed in the above terms.
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