The Allahabad High Court, Lucknow Bench, has set aside the cancellation of GST registration holding that the petitioner was not afforded an effective opportunity of hearing before the adverse action was taken.
The bench of Justice Jaspreet Singh quashed the subsequent appellate order dismissing the petitioner’s appeal as time-barred and directed the adjudicating authority to reconsider the matter after giving the taxpayer an opportunity to respond.
The petitioner/assessee approached the High Court challenging two orders.
The first was the order dated November 17, 2022, whereby the taxpayer’s GST registration was cancelled under Section 29(2)(d) of the GST Act.
Buy Now: 130 GST Judgments – E-Magazine July 2026
The second was the appellate order dated September 29, 2025, by which the taxpayer’s appeal was dismissed on the ground that it had been filed beyond the prescribed limitation period.
The central grievance before the High Court was that the registration had been cancelled ex parte, without the petitioner receiving an effective opportunity to respond to the show cause notice.
The petitioner submitted that no effective opportunity of hearing had been provided before cancellation of the GST registration.
It was argued that the powers under Section 29(2) are discretionary and cannot be exercised mechanically. According to the petitioner, the cancellation proceedings were conducted ex parte because the day-to-day GST compliances and portal operations were being handled by the petitioner’s accountant.
The petitioner stated that, as a result, he was unaware of the show cause notice uploaded on the GST portal and could not submit his reply within the stipulated period.
The petitioner therefore contended that the cancellation order could not be sustained because it had been passed without an effective opportunity to place his defence before the authority.
The Additional Chief Standing Counsel appearing for the Revenue disputed the petitioner’s contention.
The department’s position was that an opportunity had in fact been granted to the taxpayer, but the petitioner failed to avail himself of that opportunity. Therefore, according to the Revenue, the cancellation order could not be characterised as one passed without affording an opportunity of hearing.
The dispute thus brought into focus an important question concerning the procedural safeguards that must accompany cancellation of GST registration, particularly where the taxpayer claims that the statutory communication was not effectively noticed.
The earlier decision dealt with a challenge involving cancellation of GST registration and the consequences of an appellate remedy being dismissed on limitation.
The coordinate Bench had observed that although the appellate authority did not possess the power to condone the delay in the circumstances considered there, the original cancellation order could nevertheless be examined where it suffered from a fundamental defect, including absence of proper application of mind.
The Court’s reasoning also drew upon the principle that administrative and quasi-judicial authorities must provide reasons for their decisions.
The coordinate Bench had referred to the earlier judgment in Om Prakash Mishra v. State of U.P. & Ors., where the Court observed that every administrative or quasi-judicial authority should necessarily indicate reasons because reasons constitute the “heart and soul” of a judicial or administrative order.
This principle assumes particular significance where an order has serious consequences for a taxpayer’s ability to carry on business.
The earlier ruling had also noted that an order affecting the right of a person to carry on business, including through cancellation of GST registration, must comply with the constitutional requirements of Articles 14 and 19 of the Constitution of India.
The High Court found that the appellate order dated September 29, 2025 did not ascribe reasons for taking what the Court described as a harsh action of cancellation of registration.
The Court held that the absence of proper reasoning demonstrated a lack of application of mind and that the impugned appellate order did not satisfy the test under Article 14 of the Constitution.
Consequently, the Court found that the cancellation proceedings could not be allowed to stand in their existing form.
The Allahabad High Court quashed and set aside both orders.
The Court did not finally adjudicate the underlying GST dispute in favour of the taxpayer. Instead, it restored the matter for consideration in accordance with law after ensuring that the taxpayer receives a proper opportunity to present its defence.
The Court directed Sunny Enterprises to file its reply to the show cause notice within three weeks.
Thereafter, the adjudicating authority has been directed to pass a fresh order, after affording an opportunity of hearing to the parties; and taking into consideration the defence raised by the petitioner.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
