Allahabad HC Orders Petitioner to Respond to GST Registration Cancellation Notice

Shubham Singh Vs State of U.P (Allahabad High Court)

This case summary outlines the proceedings in the Allahabad High Court concerning the petition filed by Shubham Singh against the State of U.P., challenging a persistent cycle of GST registration suspension and cancellation by the State Tax authorities. The firm, R.H. Enterprises, faced repeated actions based on allegations of being non-existent and engaging in fraudulent Input Tax Credit (ITC) activities.

Background and Petitioner’s Grievances

The petitioner, Shubham Singh, is the proprietor of R.H. Enterprises, a firm registered with the GST Department since July 13, 2021, dealing in goods like old iron scrap, TMT bars, and food grains. The firm operates from its main place of business in Gonda and an additional location in Barabanki.

The core of the petitioner’s grievance was the authorities’ repeated attempts to cancel his Goods and Services Tax (GST) registration. This pattern included:

1. First Cancellation: A show cause notice (SCN) was issued on February 9, 2024. Although the petitioner replied, the registration was cancelled on April 4, 2024, following a subsequent SCN on March 18, 2024, despite an appeal being rejected. The petitioner challenged this in Writ Tax No. 141 of 2024, which the High Court allowed on May 30, 2024, leading to the revocation of the cancellation on June 6, 2024.

2. Second Cancellation: A subsequent SCN was issued on November 12, 2024, followed by a cancellation order on April 21, 2025. The petitioner successfully challenged this in a statutory appeal, and the Appellate Authority set aside the cancellation on May 28, 2025.

3. Third Suspension: Despite the appellate order setting aside the second cancellation, the GST registration was not effectively restored on the common portal. The petitioner filed Writ Tax No. 588 of 2025, which was disposed of on July 11, 2025, upon the Standing Counsel’s assurance that the registration had been restored. However, soon after, the impugned show cause notice cum suspension order dated August 12, 2025, was issued, citing the same reasons under Rules 21(a), 21(b), and 21(e) of the U.P. GST Rules.

The petitioner’s counsel argued that the repeated, virtually identical, actions constituted a clear abuse of power, indicating the authorities were “adamant” not to allow the business to run. Furthermore, the counsel asserted that no formal adjudication proceedings under Section 73 or 74 of the U.P. GST Act had been undertaken to substantiate the alleged violations, which is typically a prerequisite for sustained cancellation proceedings under Section 29(2) of the Act.

Respondent’s Submissions and Allegations of Fraud

The State’s Additional Chief Standing Counsel, relying on written instructions, defended the departmental action, citing findings from the Directorate General, GST Intelligence (DGGI), Zonal Unit, Lucknow. The instructions noted that in previous judicial and appellate orders, the Department was granted liberty to proceed afresh after providing the petitioner with supportive material for the alleged irregularities.

The crucial information provided by the State revolved around an inspection and investigation:

• Non-existent Business: An inspection carried out by the DGGI on February 8, 2024, at the main business address (LIC Colony, Patel Nagar, Gonda), found only a residential house where the petitioner’s father, Anil Singh, stated that no business activity was being carried out.
• Fraudulent Activity: The petitioner allegedly informed DGGI that the firm was run by one Dipanshu Srivastava. Srivastava, upon questioning, stated he was involved in generating forged input credit service and was subsequently arrested along with another individual. Data from Srivastava’s electronic devices allegedly showed information related to R.H. Enterprises with only outward supply recorded, suggesting a ‘bill trading’ operation without corresponding inward supply of goods.
• Absence of Records: The accounts papers and details of transporters claimed to be engaged by the petitioner were found to be non-existent. The DGGI concluded that the firm itself was non-existent.

Judicial Precedent and Court’s Decision

While the case itself did not establish a new, standalone judicial precedent, it operated on the foundational principle of due process and the efficacy of statutory remedies. The Court acknowledged the history of repeated litigation, the previous High Court order, and the successful appeal, implicitly affirming the principle that departmental action must be based on substantial material and adherence to procedural fairness. The prior orders allowing the Department to proceed afresh after providing material served as a significant context.

The Holding

The Allahabad High Court addressed the immediate petition, which challenged the show cause notice cum suspension order dated August 12, 2025. Given the State counsel’s submission that a formal adjudication process had now been initiated through the Section 74(1) notice, the Court deemed it appropriate to direct the petitioner to participate in this statutory mechanism rather than quashing the SCN in a writ proceeding.

The Court disposed of the writ petition with a direction to the petitioner:

• The petitioner must approach the appropriate authority.
• The petitioner must file a detailed reply along with documentary evidence to the Section 74(1) notice.
• The deadline set for this submission was within two weeks, specifically by September 16, 2025.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Heard learned counsel for the petitioner and Sri Rajesh Tiwari, learned Additional Chief Standing Counsel for the State-respondents.

2. This petition has been filed by the petitioner with the following main prayers:-

“i) Issue a writ, order or direction in the nature of certiorari thereby quashing the impugned show cause notice for cancellation of GST registration cum suspension order dated 12.8.2025 passed by the Assistant Commissioner, State Tax, Sector-3, Gonda in FORM GST REG-17 under rule 22(1) of U.P. GST Rules, 2017, contained as Annexure No.1, in the interest of justice.

ii) Issue a writ, order or direction in the nature of mandamus thereby commanding and directing the respondent authorities to activate/restore the GST registration bearing GST No.09IWGPS8150FIZZ, in the interest of justice.”

3. It is the case of the petitioner that the petitioner is having a proprietorship firm in the name of R.H. Enterprises w.e.f 13.7.2021, which is duly registered with the GST Department and its place of business as mentioned in the GST registration form is Patel Nagar, LIC Colony, District Gonda. The additional place of business of the firm is Gata No.883Ka, Village Khajoor Gaon, Pargana Deva, Tehsil Nawabganj, District Barabanki. The petitioner is doing business from both the places in accordance with law regarding purchase of old Iron Scrap, TMT Bars, Food Grains etc.

4. A show cause notice was issued to the petitioner for cancellation of GST registration on 9.2.2024, to which petitioner submitted his reply on 17.2.2024 and after consideration of reply, show cause notice was withdrawn and proceedings for cancellation of GST registration were dropped on 19.2.2024. Again on 18.3.2024, a show cause notice cum suspension order was issued against the petitioner. The petitioner filed his reply, but without considering the same, an illegal order of cancellation of GST registration was passed on 4.4.2024. The petitioner preferred an appeal against such an order, which was rejected on 3.5.2024. The petitioner being aggrieved against the orders dated 4.4.2024 and 3.5.2024 preferred Writ Tax No.141 of 2024, which was allowed by this Court on 30.5.2024. In pursuance of the order of the High Court, the cancellation of GST registration of the petitioner was revoked on 6.6.2024. After about five months i.e. on 12.11.2024, another show cause notice was issued to the petitioner for cancellation of GST registration, but without any documents in support thereof. The petitioner was not able to file a proper reply and asked for supportive documents. Thereafter, petitioner filed a detailed reply on 20.11.2024, which was not considered and an order for cancellation of GST registration was passed on 21.4.2025. Being aggrieved, the petitioner preferred a statutory appeal before the Additional Commissioner, Grade-1 (Appeal) State Tax, Gonda. The Additional Commissioner allowed the said appeal on 28.5.2025 and set aside the order of cancellation of GST registration. The petitioner served the appellate order upon the Assistant Commissioner, State Tax, Sector-3, Gonda on 29.5.2025. The respondents did not actually restore/activate the firm of the petitioner on the common portal of the GST Department. Feeling aggrieved, the petitioner filed Writ Tax No.588 of 2025, which has been disposed of on 11.7.2025 as learned Standing Counsel on the basis of instructions informed that the GST registration of the petitioner has been restored. However, soon thereafter, the impugned show cause notice cum suspension order dated 12.8.2025 has been issued, again mentioning the same reasons relating to Rules 21(a), 21(b) and 21(e) of the U.P. GST Rules.

5. It has been submitted by learned counsel for the petitioner that it appears that the respondents are adamant not to allow the petitioner to run his business as they are repeatedly issuing show cause notice and thereafter cancelling the GST registration of the petitioner without any reason. It has also been stated that till date, no adjudication proceedings under Section 73 and 74 of the U.P. GST Act have been undertaken against the petitioner alleging any violation of the provisions of the U.P. GST Act and the Rules framed thereunder. The cancellation of registration can only be resorted when conditions specified in sub-section (2) of Section 29 of the U.P. GST Act are attracted. There is a clear abuse of power and, therefore, the petitioner has approached this Court against the impugned show cause notice.

6. Learned Standing Counsel, on the basis of written instructions received from the office of the Assistant Commissioner, State Tax, Khand-3, Gonda, has stated that as is evident from a perusal of the order passed by the Writ Court and also by the Appellate Court, liberty was granted to the Department to proceed afresh after giving to the petitioner the supportive material relating to prima facie satisfaction of irregularities as mentioned in the show cause notice. The respondents have received a letter from the Director General, GST Intelligence, Zonal Unit, Lucknow (hereinafter referred to as ‘the DGGI’) dated 30.10.2024 with regard to R.H. Enterprises, Patel Nagar, LIC Colony, Gonda, referring to an inspection carried out of the premises on 8.2.2024. The main place of business as shown by the petitioner in the registration form is LIC Colony, Patel Nagar, Gonda and there one Anil Singh, father of the petitioner was present and he had stated that it is only a residential house and no business activity is being carried out in the said residential house. He had no knowledge of any business being run by the petitioner-Shubham Singh. When petitioner was asked about the same, he informed that the firm is being run by Dipanshu Srivastava, who in turn, in his statement as recorded by DGGI, stated that he was in the business of generating forged input credit service and Dipanshu Srivastava and one Mohit Kumar were also arrested by the DGGI. The electronic devises and Laptop of Dipanshu Srivastava showed data relating to different firm including R.H. Enterprises, being run in the name of the petitioner and when data was tallied, it showed only outward supply. The bills and accounts papers of the transporters who were engaged by the petitioner were found to be non-existent. Three summons were sent to the petitioner at his residential address also shown as his business address, asking for books of accounts, but the petitioner did not appear. The DGGI has reported that the firm is non-existent. The supplier M/s. A.K. Traders is also a non-existent supplier firm against which, separate adjudication proceedings are going on. The petitioner was issued a notice under Section 74(1) of the U.P. GST Act, a copy of which, has been enclosed as Annexure-7 to the detailed instructions on his email i.e. “AKASH4988@gmail.com” on 25.8.2025 and it is presumed to be served upon the petitioner. The said instructions are taken on record.

7. Learned counsel for the petitioner denies any service of such notice upon the petitioner before filing of the writ petition.

8. Since Section 74(1) notice has been issued to the petitioner, this writ petition is disposed of with a direction to the petitioner to approach the appropriate authority by filing a detailed reply along with documentary evidence within a period of two weeks i.e. latest by 16.9.2025.