The Allahabad High Court has pulled up GST authorities for passing frequent orders for the cancellation of GST registration of traders without giving reasons and said it amounted to ‘economic death’ as it imposes disproportionate hardship on them and disrupts legitimate business activities.
Depriving a dealer of this statutory lifeline without providing reasons or providing enough chance is antithetical to both the letter and spirit of the GST law, the court ruled on Nov 20.
A division bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla, allowing a writ petition filed by M/S Anil Art and Craft, set aside the order dated Oct 15, 2025, passed by the assistant commissioner, state tax, Bhadohi sector-1, cancelling the GST registration of the applicant with retrospective effect from Oct 8, 2025.
An SCN before this in Form GST REG-17 had been issued alleging wrongful availment and passing on of fake input tax credit in breach of section 16 of the GST law, based on a DGGI survey and alleged dealings with non-existent suppliers.
The bench noted that simply stating that a reply is “not satisfactory” only reflects the conclusion of the authority without providing the reasoning behind that conclusion. This lack of explanation fails to meet the minimum standard for a reasoned administrative order.
Emphasising that the requirement to record reasons is essential for fair procedure, the court remarked that this principle is so fundamental that even a law student would acknowledge it as non-negotiable.
The court stated that the officer had acted “carelessly” and in “complete defiance” of basic procedural safeguards, asking what could have restricted such a non-speaking order in a matter carrying civil outcomes.
The court, outlining the stringency of GST registration cancellation, mentioned that an action as virtually announcing the “economic death” of a business entity in a regime where registration is the gateway for issuing tax invoices and availing or passing on ITC. After cancellation of the registration, the taxpayer is not able to take part in the formal supply chain, even as past tax obligations, returns, and obligations continue.
The court asked that a copy of the ruling and petition be communicated to the commercial tax commissioner, who has been asked to provide the instructions within 15 days to all GST officers dealing with registration cancellation.
The court mentioned that the Instruction should provide for penal consequences against officers who pass non-speaking orders or deny a reasonable chance in such matters, so that similar lapses are not repeated.
| Case Title | M/S Anil Art And Craft vs. State of Uttar Pradesh |
| Case No. | Writ Tax No. – 5924 of 2025 |
| For Petitioner | Pranjal Shukla |
| For Respondent | C.S.C. |
| Allahabad High Court | Read Order |
