Telangana HC quashes GST Registration Cancellation over Cryptic SCN

A writ petition challenged the cancellation of a Goods and Services Tax (GST) registration, contending that both the show-cause notice and the final cancellation order were legally unsustainable due to a lack of essential factual details. The petitioner argued that the notice was cryptic, failing to specify the basis for the alleged breach of law. The court considered this argument in light of its prior judgments which had addressed similar instances of inadequate show-cause notices in GST matters.

Referencing its previous rulings, including those in W.P.No. 24494 of 2024 and earlier cases, the court reiterated the fundamental requirement for a show-cause notice to be precise and unambiguous. Citing a legal provision alone, without providing the factual context and specific details of the alleged non-compliance, prevents the taxpayer from understanding the case against them and filing an effective response. Such cryptic notices were previously criticised by the court for demonstrating a lack of due application of mind and for mechanically initiating actions, including suspension of registration, which significantly impact a taxpayer’s business operations and livelihood, implicating principles of natural justice and Article 21 of the Constitution. The court had previously emphasised the need for authorities to be sensitive to the impact of such orders and to provide clear reasons and factual backdrops in notices.