GST Registration Cancellation Quashed; Matter Remanded for Fresh Consideration

Case Details

• Case Title: M/s Gujarat Steel through Proprietor Vinodkumar Ramanlal Patel vs. Deputy Commissioner of State Tax, Ghatak 15 & Anr.

• Court: High Court of Gujarat at Ahmedabad

• Petition No.: R/Special Civil Application No. 3884 of 2024

• Judgment Date: 24 April 2025

• Category of Dispute: GST Registration Cancellation / Revocation

• Relevant Sections:

  • Section 29, CGST Act, 2017 – Cancellation of Registration

  • Section 107, CGST Act, 2017 – Appeals

  • Section 39, CGST Act, 2017 – Furnishing of Returns

• Neutral Citation: 2025:GUJHC:24717-DB

Facts of the Case

1. The petitioner, a registered dealer under GST, failed to file returns for more than six months during 2020–21 due to COVID-19 losses and standstill in business (Para 3.1).

2. Respondent No.2 issued a show-cause notice on 11.02.2021 under Section 29 for cancellation of registration; order dated 14.07.2022 cancelled registration (Para 3.2).

3. The petitioner filed an appeal on 28.07.2023 under Section 107, but it was dismissed on 24.01.2024 for delay (Para 3.6).

4. Petitioner also filed applications for revocation of cancellation (August 2023), but the same was rejected on 15.03.2024, citing dealings with non-existing firms and fake invoices—grounds not mentioned in the original SCN (Para 3.7).

Question(s) in Consideration

• Whether cancellation of GST registration and rejection of revocation application without proper opportunity of hearing violates principles of natural justice? (Para 4.2).

• Whether the appellate authority was justified in dismissing the appeal solely on delay without considering genuine reasons like COVID-19 (Para 3.6)?

• Whether reliance on grounds beyond the scope of SCN (fake invoices) is permissible? (Para 4.2).

Observations of the Court

1. The Court referred to Aggrawal Dyeing & Printing v. State of Gujarat (2022) 137 Taxmann.com 332 (Guj), where it was held that cancellation orders must not go beyond the SCN and sufficient details must be given; otherwise, it violates natural justice (Para 4.3).

2. The cancellation and revocation rejection were beyond SCN scope, and petitioner was denied hearing opportunity (Para 4.2–4.4).

3. Revenue submitted that petitioner had an outstanding liability of approx. ₹9.94 lakhs as per GSTR-1, which must be reconciled via belated GSTR-3B returns with tax, interest, and penalty under Section 39 (Para 5).

Judgment of the Court

1. Orders of cancellation (14.07.2022), appellate rejection (24.01.2024), and revocation rejection (15.03.2024) were quashed and set aside (Para 6).

2. Matter remanded to respondent authority at SCN stage with direction to allow petitioner to file belated returns under Section 39 along with tax, interest, penalty, and late fees (Para 6).

3. Respondent directed not to reject returns on grounds of delay (Para 7).

4. Petitioner directed to file undertaking before Court to submit all pending returns from April 2021 onwards with tax dues within four weeks (Para 7).

Between Fine Lines

• The Court held that cancellation and revocation of GST registration must strictly adhere to SCN grounds.

• Authorities cannot introduce new allegations (like fake invoices) without prior notice.

• Appeals delayed due to genuine causes like COVID-19 should be considered sympathetically.

• Dealers must clear tax liabilities with interest, penalty, and late fees before revocation.

• The case reinforces natural justice and procedural fairness in GST matters.

Summary of Referred Case

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