Facts of the Case

The petitioner, M/s Bharat Steels, a proprietorship concern, was issued a show-cause notice dated 12.07.2024 proposing cancellation of its GST registration. By order dated 02.09.2024, its registration was cancelled retrospectively with effect from 31.03.2022. The petitioner's subsequent application under Section 30 of the CGST Act, 2017 for revocation of cancellation was rejected on 16.10.2024, and its further appeal against that rejection was dismissed on 14.08.2025. The petitioner challenged all three orders — the retrospective cancellation, the revocation-rejection, and the appellate dismissal — before the Punjab and Haryana High Court.

Issues Involved

  1. Whether the retrospective cancellation of the petitioner's GST registration was valid in the absence of a specific notice proposing retrospective cancellation with reasons.

Petitioner's Arguments

  • No specific notice was served on the petitioner prior to the order dated 02.09.2024 informing him that his registration was proposed to be cancelled with retrospective effect, rendering the cancellation order illegal.
  • Reliance was placed on the Division Bench judgment of the same Court dated 20.02.2026 in M/s Bansal Casting v. Union of India and another (CWP No. 16770 of 2024), which held that retrospective cancellation under Section 29 of the CGST Act requires a reasoned notice specifically proposing such retrospective action.

Respondent's Arguments

  • Learned State counsel fairly admitted that no specific notice regarding retrospective cancellation of the petitioner's GST registration had in fact been served before the order dated 02.09.2024 was passed.

Court Order / Findings

  • The Court held that, since it was admitted that no specific show-cause notice was served proposing retrospective cancellation, the order cancelling the petitioner's registration with retrospective effect was unsustainable in law as violative of the principles of natural justice.
  • Following Bansal Casting, the Court reiterated that while Section 29 of the CGST Act confers power for retrospective cancellation, such power can be exercised only upon existence of specific contingencies, and the order under Section 29(2) must reflect reasons, with the assessee put to specific notice of the proposed action and the material relied upon — citing the Supreme Court's ruling in Oryx Fisheries Pvt. Ltd. v. Union of India, (2010) 13 SCC 427.
  • The petition was allowed, setting aside the show-cause notice dated 12.07.2024, the cancellation order dated 02.09.2024, the rejection of revocation dated 16.10.2024, and the appellate order dated 14.08.2025, while granting liberty to the respondents to proceed afresh against the petitioner in accordance with law.

Important Clarification

Retrospective cancellation of GST registration under Section 29 of the CGST Act is permissible only where the show-cause notice specifically proposes retrospective action with reasons and the material relied upon is disclosed to the assessee; absent such specific notice, the retrospective cancellation — and any orders built on it — will be set aside for breach of natural justice, though the department remains free to proceed afresh.

Sections Involved

  • Section 29 of the CGST Act, 2017 – confers power to cancel registration, including retrospectively, subject to specific contingencies and a reasoned order.
  • Section 30 of the CGST Act, 2017 – provides for revocation of cancellation of registration.

Decision – In Favour of

The decision was in favour of the Assessee, with the retrospective cancellation and all consequential orders set aside, though the department retained liberty to proceed afresh in accordance with law.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case Number: CWP-12339-2026 (O&M)
  • Coram: Hon'ble Mr. Justice Deepak Sibal and Hon'ble Ms. Justice Lapita Banerji
  • Date of Order: 23 April 2026

Link to Download the Order

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