The Gauhati High Court has quashed a show-cause notice proposing cancellation of a company’s GST registration after finding that the notice was vague and failed to identify the specific provisions of the Central Goods and Services Tax Act, 2017 or the related Rules allegedly violated by the taxpayer.

The bench of Justice Devashis Baruaah observed that a GST registration cancellation notice cannot be sustained when it merely alleges non-compliance without supplying the material particulars necessary for the taxpayer to understand and answer the charge.

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The notice called upon the petitioners to explain why the company’s GST registration should not be cancelled for alleged non-compliance with specified provisions of the GST Act or the Rules framed under it.

However, the High Court found that the notice did not disclose which particular statutory provisions or rules had allegedly been breached.

At an earlier stage of the proceedings, a coordinate bench of the High Court had issued notice and continued an interim order directing that no coercive action be taken against the petitioners.

When the matter subsequently came up for consideration, no one appeared on behalf of the petitioners. The CGST authorities were represented by Senior Counsel and CGST Standing Counsel S.C. Keyal, assisted by advocate K. Jain.

Despite the absence of representation for the petitioners, the Court examined the impugned notice and heard the submissions made on behalf of the tax authorities.

The Court found that it contained only a general allegation of non-compliance. It did not state the factual basis of the proposed cancellation or specify the provisions of the CGST Act or Rules that the company had allegedly failed to comply with.

The Court observed that the notice was vague and lacked material particulars. In the absence of clear allegations, the notice could not be legally sustained.

“Taking into account that the said show cause notice dated 08.03.2022 is vague and lacks material particulars, the said cannot be sustained in law,” the Court held while setting it aside.

The ruling reiterates that a show-cause notice initiating GST registration cancellation proceedings must provide sufficient particulars of the alleged violation. A general or unspecified allegation does not give the taxpayer a meaningful opportunity to respond to the proposed action.

While quashing the notice, the High Court clarified that its decision would not prevent the GST authorities from initiating fresh action in accordance with law if they found any actual violation of the CGST Act or the Rules.

The authorities, therefore, remain free to issue legally valid proceedings supported by specific allegations and relevant statutory provisions.

Accordingly, the High Court disposed of the writ petition after quashing the GST registration cancellation notice.

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