The Gauhati High Court has set aside an order cancelling a taxpayer’s GST registration, holding that a non-speaking, cryptic order issued without reasons cannot withstand judicial scrutiny.
The Court observed that even if a taxpayer fails to respond to a show-cause notice, the GST officer is still under a statutory obligation to pass a reasoned and speaking order.
Merely cancelling a registration without recording the basis for the decision violates the principles of natural justice and renders the order legally unsustainable.
A writ petition was heard by Justice Manish Choudhury. It was filed by Smt. Sunita Rai, whose GST registration was cancelled on September 13, 2024, after an SCN alleging non-filing of returns for a continuous period of 6 months.
The applicant claimed that the cancellation order was arbitrary, was based on improper reasoning, and was passed without due application of mind.
The Court observed that SCN only stated that returns had not been submitted by the taxpayers for a continuous period of 6 months, but did not specify the exact period of default. SCN should reveal the allegations clearly so that the taxpayer gets an appropriate chance to respond.
On analysing the cancellation order, the Court discovered that the proper officer had only recorded that no reply to the notice had been filed and mentioned “Others” as the reason for cancellation, without mentioning any particular reasons.
The Court held that such an order did not fulfil the requirements of Form GST REG-19 and breached the principles of natural justice.
The Court said that recording reasons is a necessary safeguard against the arbitrary exercise of power and is indicative of conscious application of mind by the authority. Therefore, it quashed the cancellation order and restored the case to the stage of the Show Cause Notice (SCN).
One month has been granted to the applicant to either respond to the SCN or provide all pending returns and pay the applicable tax dues, interest, late fees, and penalties, if any.
| Case Title | Smt. Sunita Rai vs. Union of India |
| Case No. | WP(C)/3165/2026 |
| For Petitioner | Ms B. Sarma |
| For Respondent | Mr B. Sharma, Mr S.C. Keyal, and Ms P. Upadhyay |
| Gauhati High Court | Read Order |
