GST registration was cancelled retrospectively for non-filing of returns without disclosing facts or reasons — Punjab & Haryana High Court set aside the notice, cancellation order and revocation rejection.

Issue:
Whether GST registration could be cancelled retrospectively under Section 29(2)(c) of the CGST Act when the show cause notice did not disclose material facts, supporting documents or reasons, and the cancellation order was also non-speaking.

Rule:
Power to cancel registration retrospectively exists under Section 29, but such power is not mechanical. A show cause notice must disclose the basic grounds, facts, material relied upon and the proposed action, so that the Assessee gets an effective opportunity of hearing. A quasi-judicial authority must act fairly and with an open mind.

Application:
The Department had issued a show cause notice alleging that the Assessee, being a person other than one paying tax under Section 10, had failed to furnish returns for the prescribed period. The Assessee did not file a reply. Thereafter, registration was cancelled retrospectively w.e.f. 01.11.2023 and the revocation application under Section 30 was also rejected.
The High Court found that the show cause notice did not contain any factual foundation or case-specific material. Though the notice referred to supportive documents, no effective material was disclosed. The cancellation order merely recorded “No reply submitted” and did not give reasons for retrospective cancellation. Relying on M/s Bansal Casting and ORYX Fisheries Pvt. Ltd., the Court held that such non-speaking proceedings violate natural justice.

Conclusion:
Since the notice and cancellation order were bereft of reasons and failed to disclose the material basis for retrospective cancellation, the High Court set aside the show cause notice, the retrospective cancellation order and the order rejecting revocation. However, liberty was granted to the Department to proceed afresh in accordance with law.

Impact Analysis:
This judgment reinforces that retrospective cancellation of GST registration cannot be passed as a routine portal order. The Department must disclose facts, material and reasons, otherwise the entire proceeding becomes vulnerable on the ground of natural justice.

Title: KRM TYRES PARTNERSHIP FIRM vs. STATE OF PUNJAB
Court: HIGH COURT OF PUNJAB AND HARYANA
Citation: 101 TLC(GST) 101
Dated: 04-05-2026
Provision: Under Section 29, 29(2), 30, 39(1)