The Goods and Services Tax Appellate Tribunal (GSTAT), Bengaluru Bench, has held that an appellate authority cannot refuse to decide a GST registration cancellation appeal on merits after the High Court has expressly directed it to do so, even if the authority believes that the taxpayer misrepresented facts before the court.

The Bench of Prabhakaran P.M. (Judicial Member) and Ravi Jesuraj S. (Technical Member) also clarified that applying for revocation of cancellation under Section 30 does not amount to accepting the correctness of cancellation or surrendering the right to appeal under Section 107.

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Setting aside the appellate authority’s order dated February 20, 2026, the Tribunal remanded the matter for fresh examination and a decision within three months of receipt of its order. Registration was not restored at this stage, and the legality of cancellation remains open.

The appellant/assessee is a proprietary concern trading in iron, steel and plastic scrap at Hospet in Karnataka. Commercial tax officers visited its declared business premises on May 20, 2023 and found them closed. According to the detailed cancellation order, the premises appeared to have remained shut for several days, dust had accumulated, and the room was considered too small to store goods in bulk.

The department also relied on statements attributed to two local residents and discrepancies between inward and outward supplies reflected in e-way bill data. These circumstances led the proper officer to question whether goods were actually received at or dispatched from the declared premises.

The Tribunal did not decide whether these allegations were established.

A show cause notice issued on May 20, 2023 invoked Rule 21(a), concerning failure to conduct business from the declared place. It required a reply within seven working days from service but fixed a personal hearing on May 23, 2023.

The detailed cancellation order dated June 14, 2023 went further, recording findings of false information and trading on documents without movement of goods.

That order cancelled registration retrospectively from February 21, 2019. The portal order dated June 15, 2023 recorded the effective date as February 26, 2019. The Tribunal noted that either date took cancellation back almost to the original grant of registration.

The taxpayer initially sought revocation under Section 30 instead of appealing against cancellation.

Its tax consultant appeared before the officer on October 21, 2023 and furnished information. However, no reply was uploaded on the portal.

Following a further request for restoration, officers inspected the premises again on February 12, 2024. The subsequent order did not disclose what that inspection found.

On February 26, 2024, the proper officer raised a departmental service-desk ticket requesting that the option to approve revocation be enabled. The service desk responded that approval was unavailable because the taxpayer had not replied online to the query.

The application was subsequently rejected for that reason. An appeal against rejection of revocation was dismissed on April 18, 2024.

The taxpayer approached the Karnataka High Court, Dharwad Bench, in W.P. No. 108566 of 2025 (T-RES).

By its judgment dated November 25, 2025, the High Court set aside the April 18, 2024 appellate order. It permitted the taxpayer to appeal against cancellation within four weeks of receiving the judgment and directed the appellate authority to consider that appeal on merits.

The fresh appeal was filed on December 19, 2025.

Nevertheless, the appellate authority rejected it at admission, citing lack of merits and misrepresentation of facts.

The authority reasoned that the earlier appeal concerned rejection of revocation, whereas the taxpayer had described it as an appeal against cancellation rejected as time-barred. It also held that seeking revocation indirectly acknowledged the correctness of cancellation and maintained that the High Court had not permitted a fresh appeal.

The Tribunal rejected this approach.

It found that the High Court had expressly permitted an appeal against cancellation. The December 19, 2025 appeal was filed within four weeks even when calculated from the date of the High Court’s judgment.

The appellate authority was therefore required to decide it on merits.

The Tribunal explained that if the Revenue believed the High Court had proceeded on incorrect facts, it could seek review, recall or appellate relief. Nothing on record showed that such action had been taken.

A quasi-judicial authority could not reassess the correctness of the High Court’s judgment or refuse compliance because it doubted the factual account presented to the court.

The Tribunal further held that the April 18, 2024 appellate order, having been set aside, could not support a refusal to hear the fresh appeal.

While rejecting the appellate authority’s approach, the Tribunal criticised inaccuracies in the taxpayer’s own pleadings.

The earlier appeal concerned rejection of revocation. However, the fresh statement of facts described an appeal against cancellation that had been rejected as time-barred. The record did not support that description.

The taxpayer also relied on a reply purportedly dated June 14, 2023, but that reply was absent from the Tribunal’s papers. Both cancellation orders recorded that no reply had been received.

Further inconsistencies appeared in the Tribunal appeal memorandum, including passages advancing the Revenue’s case and an incorrect description of the dispute in Form GST APL-05.

The Tribunal stressed that verified pleadings must accurately state the facts. These lapses could affect the assessment of credibility and evidence, but did not constitute a statutory ground for refusing to decide the appeal.

It left any question concerning misrepresentation before the High Court to that court.

The Tribunal distinguished the remedies available under Sections 30 and 107.

An appeal under Section 107 tests whether cancellation was justified when ordered. An application under Section 30 asks the proper officer to restore registration.

A taxpayer may choose revocation because it offers a quicker route to resuming business without contesting the allegations. That choice does not concede that cancellation was correct.

The Tribunal found no provision requiring a taxpayer seeking revocation to accept the department’s allegations. Nor did Section 107 remove the right to appeal merely because revocation had also been sought.

Although the cancellation appeal was filed beyond the ordinary statutory period, it was within the specific period permitted by the High Court. Delay therefore did not prevent consideration on merits in this case.

The Tribunal identified several unresolved issues requiring examination on the complete record.

The notice available before it cited only Rule 21(a). In contrast, the detailed cancellation order referred to Section 29(2)(e), which concerns registration obtained through fraud, wilful misstatement or suppression of facts.

The appellate authority must examine whether a separate notice was issued and served, and whether findings of false information and trading without movement of goods went beyond the allegations communicated to the taxpayer.

It must also determine whether retrospective cancellation from February 2019 was proposed and whether reasons supported the selection of that date.

Other questions include whether notice was properly served, particularly when departmental letters had returned undelivered, and whether fixing a hearing before expiry of the reply period afforded a reasonable opportunity to respond.

The authority must further examine compliance with the applicable Rule 25 verification requirements and whether inspection reports, statements and e-way bill analysis were supplied to the taxpayer.

The central factual question remains whether business was actually conducted from the declared premises.

The Tribunal declined to decide the validity of cancellation directly.

It explained that the High Court had directed the first appellate authority to examine the merits. Determining those facts for the first time at Tribunal level would replace that direction and deprive the parties of an appellate tier.

The record was also incomplete. Material relied upon by both sides—including the taxpayer’s claimed reply and supporting business documents, as well as departmental inspection reports, statements and e-way bill analysis—was unavailable before the Tribunal.

The Tribunal clarified that Section 107(11) does not permit the first appellate authority to remand the case to the proper officer. It must decide the appeal itself, although it may obtain records, require explanations and arrange further verification where necessary.

The Tribunal directed the appellate authority to obtain the complete departmental records and supply all relied-upon material to the taxpayer at least 15 days before the hearing.

The taxpayer must submit its supporting documents within 30 days of receipt of the Tribunal’s order, including the claimed reply, proof of title or possession, returns, e-way bills and books of account.

If necessary, the appellate authority may arrange fresh verification of the premises in the taxpayer’s presence. It must assess the evidence afresh, provide a personal hearing and pass a reasoned order within three months of receiving the Tribunal’s order.

The Tribunal declined immediate restoration of registration. That relief will depend on the appellate authority’s decision. All contentions on the merits of cancellation remain open, and no costs were awarded.

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