Facts of the Case

The petitioner, Elvis Sajan Mathew, proprietor of a concern with KSGST/CGST registration, had delayed in submitting Form GSTR-3B returns for the period March 2022 to August 2022. A show cause notice dated 7.10.2022 was issued proposing cancellation for failure to furnish returns for a continuous period of six months. The petitioner filed his return for March 2022 on 3.11.2022 — after the notice but before the cancellation order — yet the Assistant Commissioner passed the cancellation order (Ext.P4) on 8.01.2023 without addressing either the specific defaulted months or the return filed in the interim.

Issues Involved

  1. Whether the show cause notice and consequent GST registration cancellation order were vitiated for failing to specify the particular months of default and for ignoring the return filed by the petitioner after the notice but before the cancellation order.

Petitioner's Arguments

  • The proviso to Section 29(2) of the Act requires the officer to issue a notice specifying the mandatory requirements before cancellation, a point squarely covered by the Court's own decision in M/s Phoenix Rubbers v. The Commercial Tax Officer.
  • The petitioner had filed his return for March 2022 on 3.11.2022, before the cancellation order was passed, a fact neither the show cause notice nor the cancellation order addressed.
  • The entire proceedings leading to the cancellation order were patently erroneous and vitiated by errors of law.

Respondent's Arguments

  • It was not disputed by the respondents that the petitioner had filed his return for March 2022 on 3.11.2022, subsequent to the show cause notice.

Court Order / Findings

  • The show cause notice was found vague and issued without application of mind, since it did not state the specific months during which the petitioner had failed to file returns.
  • It was undisputed that the petitioner filed his March 2022 return on 3.11.2022 — after the notice but before the cancellation order — yet neither the notice nor the cancellation order adverted to this fact, denying the petitioner his right of defence and amounting to flagrant violation of the principles of natural justice.
  • Quasi-judicial authorities must function with fairness, openness and reasonableness; the haste and lack of reasoning here substantiated that the respondents acted unreasonably.
  • The show cause notice (Ext.P2) and the cancellation order (Ext.P4) were quashed, with liberty to the respondents to issue a fresh, properly particularised show cause notice specifying the defaulted months, and a direction that any fresh notice must be followed by a fair opportunity to respond and a reasonable hearing before finalisation.
  • The writ petition was allowed.

Important Clarification

A GST registration cancellation show cause notice under the proviso to Section 29(2) of the CGST/State GST Act must specifically identify the months of default in filing returns; a generic notice merely invoking the six-month continuous default ground, without particulars, is vague and vitiated for want of application of mind. Equally, where the registrant files the pending return(s) after the notice but before the cancellation order, the adjudicating officer must engage with that compliance before finalising cancellation — silence on the point is itself a natural-justice defect.

Sections Involved

  • Section 29(2), CGST Act, 2017 – cancellation of registration for continuous default in filing returns, with its proviso requiring a properly particularised notice before cancellation.
  • Rule 21A, CGST Rules, 2017 – governs suspension of registration pending cancellation proceedings.

Decision – In Favour of

In favour of the Assessee — both the show cause notice and the cancellation order were quashed for vagueness and natural-justice violation, though the Revenue retains liberty to issue a fresh, particularised notice.

Case Details

High Court of Kerala at Ernakulam; WP(C) No.21181 of 2023; Coram: Hon'ble Mr. Justice C.S. Dias; Judgment dated 05.07.2023; CNR not indicated on the order copy.

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