Facts of the Case

The petitioner, M/s Finman Global Pvt. Ltd., engaged in financial and business support services and holding GST registration No.36AABCF7703R1Z6 since 19.07.2018, had diligently filed returns until January 2021. While attempting to file returns for a subsequent period, the petitioner discovered that its GST registration had already been cancelled by an order dated 25.01.2023 and, on inquiry, came across the impugned order for the first time. The petitioner challenged the cancellation before the Telangana High Court, seeking to also revive the GST portal access to enable filing of returns and to restrain imposition of penalties for the intervening period.

Issues Involved

  1. Whether the cancellation order was internally self-contradictory and thus unsustainable, given uncertainty over whether the underlying show cause notice had ever been served.
  2. What relief should follow, including on the question of penalties for the period the petitioner was locked out of filing returns.

Petitioner's Arguments

  • The petitioner's counsel pointed out that although the impugned order referred to a show cause notice dated 11.08.2022 and the petitioner's reply dated 19.09.2022, the petitioner had in fact never been served with that show cause notice — so no question of filing any reply could arise.
  • It was submitted that the impugned order was self-contradictory: while its first line referred to the petitioner's reply dated 19.09.2022 to the notice dated 11.08.2022, its second line stated that no reply to the show cause notice was submitted by the petitioner at all.

Respondent's Arguments

  • The Standing Counsel for Commercial Tax fairly submitted that, in a case of this nature, it would be just and proper to remand the matter back to the respondent to redo the exercise after affording an opportunity of hearing to the petitioner.

Court Order / Findings

  • The Court noted the internal contradiction pointed out by the petitioner — the cancellation order simultaneously acknowledging and denying receipt of the petitioner's reply — casting real doubt on whether the underlying show cause notice had genuinely been served before cancellation.
  • Accepting the Standing Counsel's fair concession, the Court set aside the impugned cancellation order dated 25.01.2023 and remanded the matter to the respondent, since the petitioner was now in receipt of a copy of the cancellation order along with the show cause notice dated 11.08.2022 placed on record.
  • The petitioner was permitted to submit its reply to the show cause notice within seven days, which the respondent was directed to take on board and thereafter pass an appropriate order in accordance with law after a hearing, within four weeks of receipt of the reply.
  • The writ petition was allowed without costs.

Important Clarification

  • A GST registration cancellation order that is internally inconsistent about whether the underlying show cause notice was actually served and replied to cannot be sustained, since it leaves the factual foundation for the cancellation in doubt.
  • Where the department itself concedes the appropriateness of a redo, courts will remand with a fresh opportunity of hearing rather than adjudicate the underlying cancellation grounds on writ.

Sections Involved

  • Section 29(2), Central Goods and Services Tax Act, 2017 – governs cancellation of registration and the requirement of a valid, served show cause notice as its foundation.
  • Rule 22, Central Goods and Services Tax Rules, 2017 – procedure for cancellation of registration, referenced in the pleadings.

Decision – In Favour of

The decision is in favour of the Assessee — the cancellation order was set aside and the matter remanded for fresh adjudication after a genuine opportunity to reply and be heard.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case No.: WP No. 16866 of 2023
Coram: Chief Justice Ujjal Bhuyan and Justice N. Tukaramji
Date of Order: 03.07.2023

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