The Allahabad High Court has set aside an appellate order upholding the cancellation of a firm’s GST registration after finding that the taxpayer was not given an opportunity of hearing on its objections to additional material introduced by the department during the appeal.

The bench of Justice Vikas Budhwar held that when documents that were not part of the original proceedings are introduced at the appellate stage, objections raised by the affected party must be considered and an opportunity of hearing must be provided. The Court remanded the matter to the appellate authority for a fresh decision within two months.

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The petitioner, a proprietorship firm, challenged proceedings arising from a show cause notice dated April 27, 2026, proposing cancellation of its GST registration. The notice required the firm to appear before the proper authority on May 7, 2026, at 11:14 a.m. The registration was also suspended.

According to the petitioner, the notice merely quoted statutory provisions without disclosing the necessary factual grounds for initiating cancellation proceedings.

An order cancelling the registration was subsequently passed on June 1, 2026. The firm challenged that decision before the appellate authority on several grounds.

The dispute before the High Court centred on additional inputs submitted by the department through a letter dated July 14, 2026. The petitioner maintained that this material formed part of neither the original show cause notice nor the cancellation order.

The firm objected to the introduction of the material, and its objections were recorded in the appellate authority’s order sheet dated July 17, 2026. However, the appeal was rejected on July 20, 2026, allegedly without a further opportunity to address the additional material.

Taxpayer Questions Department’s Right To Introduce Additional Evidence

The petitioner argued that Rule 112 of the Uttar Pradesh Goods and Service Tax Rules, 2017, permits the production of additional evidence by the assessee, rather than the department.

In support, it relied on the Allahabad High Court’s decisions in Anandeshwar Traders v. State of U.P. and Khan Enterprises v. Additional Commissioner Grade-2 and Others.

The firm further submitted that, despite recording its objections on July 17, the appellate authority proceeded to decide the appeal on July 20 without allowing it to present its position on the fresh material.

Although the writ petition originally challenged the show cause notice, cancellation order and appellate order, the petitioner confined its relief during the hearing to the challenge against the appellate order.

The State opposed the petition, submitting that the registration had been cancelled because the firm did not reply to the show cause notice.

It argued that the additional inputs were submitted during the appeal to enable the appellate authority to decide the matter in the correct perspective. According to the department, a copy of those inputs had been served on the petitioner, and there was consequently no violation of natural justice.

The Court identified the central controversy as whether the department could introduce additional documents at the appellate stage and whether the appellate authority could disregard objections raised against them.

Justice Budhwar observed that where material not forming part of the original proceedings is introduced and the affected party objects, the objection must be addressed through consideration and an opportunity of hearing.

Referring to Mahaveer Trading Company v. Deputy Commissioner, State Tax and Another, the Court held that denying such an opportunity would result in a travesty of justice.

On Rule 112, the Court noted that coordinate benches in Anandeshwar Traders and Khan Enterprises had expressed the view that additional documents could not be introduced by the department at the appellate stage, as that right was available to the assessee alone.

The operative basis for setting aside the appellate order, however, was the denial of a hearing after the petitioner filed its objections.

The Court held, “The order stands vitiated as the same is in violation of principles of natural justice.”

The matter was remitted to the appellate authority to pass a fresh order within two months.

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