Facts of the Case

The petitioner, M/s. Hithaishi Infra Machine, registered under GST with effect from 16.07.2020, was served a show cause notice dated 24.08.2024 calling upon it to show cause why its registration should not be cancelled, on the ground that its unit did not exist at the registered address and no response was received to physical verification; the notice also suspended the registration with effect from 24.08.2024. A cancellation order dated 10.09.2024 followed, cancelling the registration retrospectively with effect from 16.07.2020 — a proposal never disclosed in the show cause notice. The petitioner also challenged the blocking of the balance in its Electronic Credit Ledger vide a separate notice dated 08.11.2024, made without an opportunity of hearing or disclosure of the inspection report alleging non-existence.

Issues Involved

  1. Whether cancelling GST registration with retrospective effect, when the show cause notice never proposed or disclosed such retrospective effect, violated principles of natural justice.
  2. Whether the cancellation order and the consequent blocking of the Electronic Credit Ledger deserved to be set aside on this ground.

Petitioner's Arguments

  • The cancellation order brought the cancellation into effect from 16.07.2020, though no such retrospective proposal was mentioned in the show cause notice, denying the petitioner any opportunity to respond to that specific proposal — a clear violation of natural justice.
  • Blocking of the Electronic Credit Ledger, without a personal hearing or furnishing of the inspection report and photographs on which the allegation of non-existence was based, was similarly unconstitutional and contrary to natural justice.

Respondent's Arguments

  • The State respondents contested the writ on the merits of the underlying non-existence allegation; the order specifics regarding retrospective effect were not separately defended before the Bench.

Court Order / Findings

  • The Court found it clear from the record that there had been a violation of the principles of natural justice, as the petitioner was never given notice that the registration would be cancelled with retrospective effect from 16.07.2020, and could therefore not answer to any such proposal.
  • The Writ Petition was allowed, setting aside the order of cancellation dated 10.09.2024, and the matter was remanded back to the authorities for an appropriate decision after giving the petitioner an opportunity of hearing. No costs were awarded, and pending miscellaneous applications were closed.

Important Clarification

  • Cancellation of GST registration with retrospective effect is impermissible where the show cause notice did not disclose or propose such retrospective cancellation; failing to give the registrant notice and an opportunity to respond specifically to the retrospective element constitutes a violation of natural justice sufficient to set aside the entire cancellation order.
  • This principle applies irrespective of the underlying allegation (such as non-existence of the business at the registered address) — the procedural safeguard of prior notice of the exact relief/effect proposed must be honoured before an adverse order with retrospective consequences is passed.

Sections Involved

  • Section 29 of the Goods and Services Tax Act, 2017 — power to cancel registration, including with retrospective effect, subject to due process.
  • Articles 14, 19(1)(g) and 300A of the Constitution of India — invoked as grounds against the retrospective cancellation and the blocking of the Electronic Credit Ledger.

Decision – In Favour of

Allowed in favour of the Assessee; the retrospective cancellation order was set aside and the matter remanded for a fresh decision after affording an opportunity of hearing.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No.26305 of 2025
Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice T.C.D. Sekhar
Date of Order: 24th September, 2025

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