Case Summary
Case Title: M/s Udai Associates v. State of U.P. & Others
Court: High Court of Judicature at Allahabad
Petition No.: Writ Tax No. 1174 of 2024
Neutral Citation: 2025:AHC:4390
Date of Judgement: 09.01.2025 (Reserved on 06.01.2025)
Hon’ble Judge: Justice Piyush Agrawal
Category of Dispute: GST Registration Cancellation
Relevant Sections/Rules: Section 29 of the CGST Act, Rule 21A(2A) of CGST Rules, principles of natural justice
Facts (Paras 2–6)
The petitioner, M/s Udai Associates, failed to file GSTR-1 and GSTR-3B due to unavoidable family circumstances. One partner was diagnosed with cancer, and other partners were engaged in her treatment, leading to neglect of business and delay in compliance. The GST authorities issued a cancellation notice on 12.04.2023 for continuous non-filing of returns for six months. The registration was cancelled on 26.05.2023.
The petitioner later filed pending returns with tax, interest, and late fees up to May 2024 and deposited dues. An appeal was filed on 30.05.2024 but dismissed on 06.07.2024 as time-barred, without examining merits. The petitioner contended that cancellation was on a ground different from the notice (Rule 21A(2A) comparison of returns), amounting to violation of natural justice.
Questions for Consideration
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Whether registration can be cancelled on grounds different from the show cause notice?
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Whether dismissal of appeal on limitation without deciding merits denies substantive justice?
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Whether restoration is warranted once dues and returns are filed?
Observations (Paras 9–11)
The Court observed that the cancellation notice cited non-filing of returns for six months, but the final order was passed on an altogether different ground—that comparison of returns under Rule 21A(2A) was not possible. This amounted to a breach of natural justice as the petitioner had no opportunity to respond.
The appellate authority also failed to adjudicate on merits, merely dismissing the appeal on limitation, thereby not merging with the original order. The Court relied on precedents:
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Precitech Engineers v. State of U.P. (2023) – held that cancellation without clear hearing and proper reasons is arbitrary.
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Assaka Powerinfra Pvt. Ltd. v. State of U.P. (2024) – cancellation orders passed mechanically without proper opportunity are unsustainable.
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Ennkay Timbers v. State of U.P. (2024) – once dues and returns are filed, registration deserves restoration.
Judgement (Paras 12–14)
The Court quashed the cancellation order dated 26.05.2023 as unsustainable in law. It held that the cancellation was beyond the scope of the show cause notice and in violation of natural justice. The writ petition was allowed, and the authorities were directed to restore the petitioner’s registration forthwith upon production of the certified copy of the order.
Table of Cases Referred
| Case | Citation | Ratio / Holding |
|---|---|---|
| Precitech Engineers v. State of U.P. | MANU/UP/1870/2023 | Cancellation without specific hearing date and by non-speaking order violates natural justice. |
| Assaka Powerinfra Pvt. Ltd. v. State of U.P. | Writ Tax No. 1317/2024 (02.09.2024) | Cancellation without proper opportunity is mechanical and unsustainable. |
| Ennkay Timbers v. State of U.P. | 2024 UPTC (116) – 31 | Registration should be restored if dues and returns are filed. |
| Jaiprakash Thekedar v. Commissioner, Commercial Taxes | 2023 UPTC (Vol.113) – 162 | Lack of time/date in SCN is arbitrary. |
| Chandra Sain v. UOI | 2022 UPTC (Vol.112) – 1861 | Non-speaking cancellation orders lack legal sanctity. |
Between Fine Lines
This ruling underscores that GST registration cannot be cancelled on grounds not mentioned in the show cause notice. Authorities must adhere to principles of natural justice, provide clear reasons, and offer an opportunity of hearing. Even if there is past non-compliance, once dues and returns are filed, registration must be restored to ensure business continuity.
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