Case Law Details
Goyal Brothers Vs Commissioner (Punjab and Haryana High Court)
The Punjab and Haryana High Court partly allowed the petition challenging the retrospective cancellation of GST registration through order dated 15.06.2025. The petitioner limited the present proceedings only to the challenge against retrospective cancellation and sought liberty to separately challenge the recovery from the Electronic Cash Ledger dated 27.05.2025 and adjudication order dated 18.02.2025, which the Court permitted. The Court found that before retrospectively cancelling the GST registration, the authorities had not issued any specific notice informing the petitioner that such retrospective action was proposed. The show cause notice preceding the impugned order did not indicate that retrospective cancellation was contemplated. Relying on the Division Bench judgment in M/s Bansal Casting vs. Union of India and another dated 20.02.2026, the Court reiterated that although Section 29 of the CGST Act permits retrospective cancellation, such action can be taken only upon existence of specific contingencies and the order must disclose reasons for retrospective effect. The Court also emphasized that principles of natural justice require authorities to clearly notify the assessee of the proposed action and the grounds relied upon. Since no such specific notice was served, the impugned order dated 15.06.2025 was set aside, with liberty granted to the respondents to proceed afresh in accordance with law. The petitioner was also permitted to file separate petitions regarding the remaining grievances.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. Learned counsel for the petitioner submits that since through this petition multiple prayers on distinct issues have been made, he be permitted to pursue this petition only with regard to the challenge to the order dated 15.06.2025 (Annexure P-3) through which its GST registration has been retrospectively cancelled without serving upon the petitioner a specific notice in this regard.
2. The afore prayer made on the petitioner’s behalf is accepted, as a result whereof the petitioner’s challenge to the recovery made by the respondents from the petitioner’s Electronic Cash Ledger on 27.05.2025 and the passing of the impugned adjudication order dated 18.02.2025 (Annexure P-6) is permitted to be raised through filing of a separate petition.
3. So far as the challenge to the order dated 15.06.2025 (Annexure P-3), through which the petitioner’s GST registration has been retrospectively cancelled is concerned, it is found that prior to such retrospective cancellation, no specific notice in this regard was served upon the petitioner because in the notice, which preceded the order dated 15.06.2025, the petitioner was not put to notice that the respondent sought to retrospectively cancel the petitioner’s GST registration.
4. In the light of the afore facts, the petitioner’s case is fully covered in its favour by the following observations made by a Division Bench of this Court in the judgment 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.”
5. In light of the above, the impugned order dated 15.06.2025 (Annexure P-3) is set aside with liberty to the respondents to proceed afresh against the petitioner, in accordance with law.
6. Qua the other prayers made through this petition, the petitioner is permitted to file a fresh petition(s).
7. Disposed of.
Author Bio
