Facts of the Case

The petitioner, M/s. R.K.I. Builders Private Limited, engaged in works contract services and registered under GST since 17.07.2018, underwent Corporate Insolvency Resolution Process (CIRP) under orders of the NCLT, Hyderabad Bench dated 29.01.2025, and claimed it was consequently unable to file returns from February 2025 onward. A show cause notice dated 22.05.2025 was issued proposing cancellation of registration on the ground that the petitioner was not conducting business from its declared place of business. However, the subsequent order dated 15.06.2025 cancelled the registration with retrospective effect from 01.07.2017 — a date never proposed in the SCN. The petitioner challenged the cancellation before the Andhra Pradesh High Court.

Issues Involved

  1. Whether a registering authority can cancel GST registration with retrospective effect when the show cause notice never proposed such retrospective cancellation.
  2. Whether such action, going beyond the scope of the SCN, violates principles of natural justice.

Petitioner's Arguments

  • The show cause notice only proposed cancellation of registration without indicating any retrospective date, while the impugned order cancelled registration retrospectively from 01.07.2017.
  • This constituted action beyond the four corners of the SCN and violated principles of natural justice.
  • The disruption caused by the CIRP process was the real reason returns could not be filed from February 2025 onward.

Respondent's Arguments

  • The registration was rightly cancelled because the declared place of business was found vacant and the petitioner had ceased to do business from that address.
  • Registered persons are required to operate and conduct business from the address disclosed at the time of registration, and cancellation on this ground was justified.

Court Order / Findings

  • The Division Bench held that the purpose of a show cause notice is to place the noticee on notice of the proposed action so that an opportunity to respond can be availed.
  • Any action taken by the authority beyond the terms set out in the notice is violative of principles of natural justice, since the affected person had no notice of that specific action.
  • Since the SCN did not propose retrospective cancellation while the order cancelled registration from 01.07.2017, there was a clear violation of natural justice.
  • The order of cancellation dated 15.06.2025 was set aside and the matter remanded to the Superintendent for fresh orders after giving the petitioner an opportunity of hearing and after setting out the proposed action clearly.

Important Clarification

  • A registering authority cannot travel beyond the scope of the show cause notice: if the SCN does not propose retrospective cancellation, the final order cannot cancel registration retrospectively.
  • This principle mirrors the settled position (also applied to Section 73/74 demand orders) that an adjudicating authority cannot confirm a demand or take an adverse action exceeding what was proposed in the notice.

Sections Involved

  • Section 29(2)(b), CGST Act, 2017 – cancellation of registration where a registered person contravenes prescribed provisions.
  • Rule 22(3), CGST Rules, 2017 – procedure for passing an order of cancellation of registration.
  • Form GST REG-17 & REG-21 – show cause notice for cancellation and application for revocation of cancellation.

Decision – In Favour of

Disposed of in favour of the Assessee; the retrospective cancellation order was set aside and the matter remanded for a fresh decision confined to what was actually proposed in the SCN.

Case Details

High Court of Andhra Pradesh at Amaravati; Writ Petition No. 19427 of 2025; Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice T.C.D. Sekhar; Order dated 17.09.2025.

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