2025 (6) TMI 1568 - HC - GST

Cancellation of GST registration of the petitioner - Ext.P4 order of cancellation was issued without giving a proper notice as contemplated under Rule 22 of CGST Rule 2017 - Violation of principles of natural justice - HELD THAT - As per Rule 22 it is obligatory for the authority concerned to issue a show cause notice granting time of seven working days to submit a reply to the show cause notice. Moreover the Form prescribed for the show cause notice i.e. FORM GST REG-17 also contemplates for providing the reason on which the proposal to cancel the registration was being made. On going through Ext.P3 show cause notice it is seen that both the conditions are not complied with. Even though in Ext.P3 the petitioner was granted seven working days for submitting a reply the order was seen passed on 21.06.2023 i.e before expiry of seven days and no specific reasons or violation are mentioned in the Ext.P3 show cause notice. What is mentioned in Ext.P3 was as follows Non compliance of any specific provisions in the GST Act or the Rules made thereunder as may be prescribed . However which provision of the GST Act or the Rules was violated by the petitioner was not specifically mentioned in Ext.P3. Therefore it is evident that the Ext.P3 notice cannot be treated as a valid notice issued in compliance with the statutory stipulations contained in Rule 22 and therefore there are no justifiable reasons to sustain Ext.P4 order of cancellation of registration. This writ petition is disposed of quashing Ext.P4.

Summary

The Kerala High Court, through Justice Ziyad Rahman A. A., quashed the cancellation order (Ext.P4) of the petitioner's registration under the CGST Act, 2017, on the ground that the cancellation was effected without compliance with Rule 22 of the CGST Rules, 2017. The petitioner challenged Ext.P4 on the basis that the show cause notice (Ext.P3) did not specify the "specific reasons" for cancellation as required and that the order was passed before the expiry of the statutory seven-day period for reply.The Court emphasized that Rule 22 mandates issuance of a show cause notice granting seven working days to submit a reply and requires the notice to specify the reasons for proposed cancellation, as prescribed in FORM GST REG-17. Ext.P3 failed both requirements: it merely cited "Non compliance of any specific provisions in the GST Act or the Rules made thereunder as may be prescribed" without identifying the violated provisions, and the cancellation order was passed before the seven-day period elapsed.Accordingly, the Court held that Ext.P3 was not a valid notice under Rule 22, rendering Ext.P4 unsustainable. The writ petition was disposed of by quashing Ext.P4, with liberty granted to the authorities to initiate fresh cancellation proceedings only after issuing a proper notice specifying reasons and allowing the statutory time for reply.