Facts of the Case

M/s Mahavir Metal Company's GST registration was cancelled retrospectively by order dated 01.09.2025 (Annexure P-4) purportedly under Section 29 of the CGST Act, 2017. The petitioner's grievance before the Punjab and Haryana High Court was that the show cause notice preceding the cancellation had never informed it that retrospective cancellation was being contemplated — a fact admitted by the respondents. Since the petitioner had no opportunity to address the specific ground of retrospectivity before its registration was cancelled with effect from an earlier date, it challenged the order as violative of natural justice and sought its quashing under Article 226 of the Constitution.

Issues Involved

  1. Whether a GST registration can be cancelled with retrospective effect under Section 29 of the CGST Act without the show cause notice specifically proposing retrospective cancellation.
  2. Whether such an omission violates natural justice as laid down by the Supreme Court in Oryx Fisheries Pvt Ltd v. Union of India.
  3. Whether the cancellation order deserves to be set aside and the matter remitted for fresh proceedings.

Petitioner's Arguments

  • The show cause notice preceding the cancellation order never proposed or even mentioned that the registration would be cancelled retrospectively, depriving the petitioner of an opportunity to object to that specific consequence.
  • Relying on Bansal Casting v. Union of India and, through it, the Supreme Court's ruling in Oryx Fisheries Pvt Ltd v. Union of India, (2010) 13 SCC 427, a show cause notice must disclose the basic grounds of the proposed action, and any document relied upon must be furnished to the noticee.
  • The retrospective cancellation, being beyond the scope of the notice, was arbitrary and unsustainable.

Respondent's Arguments

  • The respondents admitted that the show cause notice did not specifically flag retrospective cancellation as a contemplated consequence.
  • It was submitted that the respondents could be granted liberty to proceed afresh in accordance with law after curing the procedural defect, rather than invalidating the cancellation outright on merits.

Court Order / Findings

  • The Court found it undisputed that the show cause notice did not put the petitioner to notice of the proposal to cancel its registration retrospectively, a mandatory pre-condition under settled law.
  • Following its own precedent in Bansal Casting v. Union of India, which applied the Supreme Court's ruling in Oryx Fisheries, the Court reiterated that a show cause notice must disclose the grounds on which an adverse action is proposed, and cancellation of registration with retrospective effect cannot be sprung upon the assessee without prior notice of that specific consequence.
  • The impugned cancellation order dated 01.09.2025 was set aside, with liberty granted to the respondents to proceed afresh in accordance with law.

Important Clarification

  • Retrospective cancellation of GST registration under Section 29 of the CGST Act is a distinct and more drastic consequence than ordinary cancellation, and must be expressly proposed in the show cause notice to give the assessee a fair opportunity to respond to it specifically.
  • A show cause notice silent on retrospectivity cannot subsequently support an order cancelling registration from a back-dated effective date.

Sections Involved

  • Section 29 of the CGST Act, 2017 — cancellation or suspension of registration, including retrospective cancellation.
  • Article 226 of the Constitution of India — writ jurisdiction invoked for violation of natural justice.

Decision – In Favour of

The writ petition was allowed, in favour of the petitioner/assessee, with the retrospective cancellation order set aside and liberty granted to the department to proceed afresh in accordance with law.

Case Details

Punjab and Haryana High Court; CWP-31096-2025; Coram: Justices Deepak Sibal and Lapita Banerji; decided on 19.05.2026.

Link to Download the Order

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