Case Law Details
Sri Laxmi Narasimha Metals Vs Appellate Joint Commissioner of State Tax (S.T.) (Telangana High Court)
The Telangana High Court heard a writ petition challenging the cancellation of the petitioner’s GST registration, the show cause notice issued in Form GST REG-17 dated 18 June 2025, the cancellation order dated 30 July 2025, and the appellate order dated 30 March 2026 affirming the cancellation. The petitioner contended that the show cause notice did not specify any shortcomings, allegations, or contraventions forming the basis for cancellation, thereby preventing the petitioner from submitting an effective explanation. It was also argued that the notice had been incorrectly issued in Form GST REG-17 instead of Form GST REG-31. According to the petitioner, the notice lacked details regarding any alleged fraud or wrongful availment of Input Tax Credit (ITC).
The State opposed the petition by contending that the petitioner had already raised these issues during appellate proceedings and had provided explanations before the appellate authority. However, the State did not dispute that the show cause notice lacked details of the alleged contraventions.
The High Court examined Rules 21 and 22 of the GST Act and observed that these provisions prescribe the mode and procedure for issuing show cause notices and cancellation orders. The Court noted that the rules specifically require a detailed notice setting out the alleged contraventions and shortcomings committed by the taxpayer. In the absence of such particulars, the Court held that the show cause notice dated 18 June 2025 and the consequential cancellation order dated 30 July 2025 were not sustainable in law. The Court further held that the appellate order dated 30 March 2026 also could not survive because it was based on the defective proceedings.
Accordingly, the Court set aside the show cause notice, the cancellation order, and the appellate order. At the same time, considering the submission of the Special Government Pleader that the cancellation was based on alleged fraudulent withdrawal of ITC, the Court granted liberty to the authorities to issue a fresh notice within one week and proceed strictly in accordance with the applicable rules. As a precautionary measure, the Court directed the petitioner not to avail ITC benefits until the proceedings are concluded by the authorities. Consequent to the order, the cancellation of the GST registration stood revoked. The writ petition was allowed with no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr.Akruti Goyal, learned counsel appearing for the petitioner; Mr.Swaroop Oorilla, learned Special Government Pleader for State appearing for respondents.
2. The instant writ petition has been filed by the petitioner under Article 226 of the Constitution of India seeking the following relief/s, viz.,
“… to issue order or direction more particularly one in the nature of writ of Mandamus or any other appropriate order a) by declaring the action of 1st Respondent in cancelling the GST registration certificate of the Petitioner vide GSTIN 36APSPK4060P1Z6 as illegal, arbitrary, contrary to law laid down by this Hon’ble Court and in contravention of the fundamental right to carry business under Article 19(1)(g) of the Constitution of India and against the provisions of the Central Goods and Services Tax Act, 2017 and Telangana Goods and Services Act 2017; and b) consequently set aside the show cause notice for cancellation of registration in Form GST REG-17, dated 18.06.2025, the order for cancellation of registration in Form REG-19, dated 30 07 2025 issued by the 1st Respondent and the Appeal order in Form APL-04, dated 30.03.2026 issued by the 1st Respondent.”
3. This petition is filed seeking the quashing of the show cause notice for cancellation of registration in Form REG-17, dated 18.06.2025 and also the subsequent order passed dated 30.07.2025, whereby the GST registration of the petitioner stood cancelled. The petitioner has also challenged the order passed by the appellate authority dated 30.03.2026, dismissing the appeal against the cancellation of the registration.
4. At the outset, it was contended that the show cause notice was bereft of any shortcomings alleged against the petitioner on the basis of which the show cause notice was issued. In the process, the petitioner was not in a position to give a satisfactory explanation. It was also alleged that the show cause notice has been issued under Form GST REG-17, whereas Form REG-17 is the one that is issued only under the provisions of Rule 22. The respondents ought to have issued the show cause notice under Form REG-31 and on this ground also the impugned order is liable to be set aside. The fact that the show cause notice is bereft of any contentions and allegations or any fraud committed by the petitioner.
5. The learned State Counsel representing the respondents contends that this aspect was duly agitated by the petitioner in the course of hearing of the appeal and in the appeal the petitioner has given the specific justification and therefore the ground no longer survives. However, the fact that the show cause notice does not reveal the shortcomings or the alleged contraventions on the part of the petitioner is not in dispute.
6. The fact that both the Rule 21 and Rule 22 of the GST Act which specifically prescribe the mode, procedure, and the manner in which the show cause notice to be issued and final orders are to be passed, and both these provisions specifically provide for the issuance of a detailed show cause notice in respect of the contraventions and the shortcomings said to have been violated by the petitioner. In the absence of which, the show cause notice dated 18.06.2025 and the consequential order of cancellation, dated 30.07.2025 would not be sustainable in the eyes of law. As a consequence, the subsequent appeal and the appellate order, dated 30.03.2026 would also not be sustainable. On this very ground, the impugned show cause notice, the order of cancellation and the subsequent order in the appeal are deserve to be and accordingly set aside.
7. Considering the fact that this Court is setting aside the order and also taking note of the contention of the Special Government Pleader that the reason for the cancellation of the registration was the so-called alleged fraudulent withdrawal of ITC on the part of the petitioners, we deem it fit to direct the respondent No.2 to issue a fresh notice, if they so desire, within a period of one week from today and strictly proceed further in accordance with the provisions of the rules governing and pass appropriate orders as early as possible.
8. Meanwhile, as an abundant precaution, this Court directs the petitioner not to avail the benefits of ITC until the proceedings are finalized by respondent No.2. As a consequence of allowing the present writ petition, the impugned order for cancellation of the registration, dated 30.07.2025 stands revoked.
9. With the above directions, the instant writ petition stands allowed.
There shall be no order as to costs.
Miscellaneous applications pending, if any, shall stand closed.
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