Case Law Details
S R Enterprise Vs Union of India nd 2 Ors (Gauhati High Court)
The petitioner challenged the order dated 05.02.2026 cancelling its GST registration, contending that no fresh show cause notice had been issued before the cancellation. The cancellation order relied upon a show cause notice dated 13.08.2024, which had been issued alleging non-filing of returns under Section 39 of the Central Goods and Services Tax Act, 2017.
The petitioner, a partnership firm holding GST registration, submitted that although Section 29 of the CGST Act empowers the Proper Officer to cancel registration, the proviso to Section 29(2) requires that the registered person be given an opportunity of being heard. It was argued that even if the notice dated 13.08.2024 was validly issued, no action had been taken on it for more than 18 months, and the subsequent cancellation on 05.02.2026 could not be treated as action pursuant to that notice.
The Gauhati High Court examined the record and found that the show cause notice had indeed been issued on 13.08.2024, but the Proper Officer took no further steps until the registration was cancelled on 05.02.2026. During this intervening period, two financial years had elapsed and various events requiring filing of GST returns had occurred. The Court observed that these intervening circumstances had not been considered by the Proper Officer.
The Court held that the prolonged inaction had rendered the show cause notice redundant, and cancellation of registration on its basis was not in conformity with the proviso to Section 29(2) of the CGST Act, 2017. It further observed that the manner in which the cancellation was effected appeared unfair and unjust.
Accordingly, the Gauhati HC set aside and quashed the GST registration cancellation order dated 05.02.2026. At the same time, the Court clarified that its decision would not preclude the Proper Officer from initiating fresh proceedings under Section 29, if the requisite materials were available. The Court also made it clear that setting aside the cancellation order should not be construed as waiving the petitioner’s obligation to comply with the requirements of the CGST Act, 2017.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Ms. M Das, the learned counsel appearing on behalf of the petitioner. Also heard Ms. U Barua, the learned CGC, who appears on behalf of the respondent No.1 and Mr. K Jain, the learned counsel who appears on behalf of the respondent Nos.2 and 3.
2. The petitioner herein has approached this Court challenging the order of cancellation of the registration dated 05.02.2026. It is the case of the petitioner that there was no show cause notice issued to the petitioner against the said cancellation. In fact, the show cause notice which has been referred to in the order of cancellation of the registration dated 05.02.2026 is almost 18 months old.
3. The materials on record show that the petitioner herein is a partnership firm and was granted registration bearing Registration No.18ADYFS0183K1ZA. On the ground that the petitioner did not submit the returns in terms with Section 39 of the Central Goods and Service Tax Act 2017 (for short, ‘the Act of 2017’), a show cause notice was issued on 13.08.2024 in the portal.
4. Be that as it may, the respondent No.3, thereupon, did not take any action. Recently, the petitioner could come to learn upon taking steps for filing of the returns that the petitioner’s registration was cancelled on 05.02.2026 on the basis of a show cause notice dated 13.08.2024. It is under such circumstances, the petitioner is before this Court.
5. The learned counsel appearing on behalf of the petitioner submitted that Section 29 of the Act of 2017, though permits the Proper Officer to cancel the registration, but before doing so, the Proper Officer has to give the petitioner an opportunity of being heard. The learned counsel submitted that even assuming for argument’s sake that the notice dated 13.08.2024 can be said to be a notice properly issued, then also not taking action on the same for a period of more than 18(eighteen) months, and all of a sudden taking action on 05.02.2026, cannot be said to be an action based upon the said show cause notice.
6. This Court has also heard Mr. K Jain, the learned counsel for the respondent Nos.2 and 3 and has given an anxious consideration to the submissions so made by the learned counsels appearing on behalf of the parties as well as the materials on record.
7. From a perusal of the materials on record, it is apparent that the show cause notice was issued on 13.08.2024. Thereupon, the Proper Officer did not take any steps. The records further reveal that all of a sudden, on 05.02.2026, the registration was cancelled. The cancellation of the registration in such a manner cannot be said to be in compliance to the proviso to Section 29(2) of the Act of 2017, inasmuch as, the said notice which was issued on 13.08.2024 has become redundant in view of no action being taken. Further to that, for the period from 13.08.2024 till 05.02.2026, there has been 2(two) financial years, and there were various other intervening events, which required filing of returns. These aspects were not taken into consideration by the respondent No.3 and as such, it is the opinion of this Court that the impugned order of cancellation dated 05.02.2026 is not in conformity with the proviso to Section 29(2) of the Act of 2017, but also appears to be unfair and unjust.
8. Accordingly, the impugned order of cancellation of the registration dated 05.02.2026 is set aside and quashed.
9. Before parting with the records, this Court, however, observes that the setting aside of the order for cancellation of the registration dated 05.02.2026 shall not bar the Proper Officer to initiate action against the petitioner in the circumstance, materials are available for initiating action under Section 29, if so advised.
10. It is further observed that interference with the order of cancellation dated 05.02.2026 shall not be construed that this Court had waived requirement of compliance by the Petitioner in terms of the Act of 2017.
11. With the above, the writ petition stands disposed of.
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