The Supreme Court has stayed the operative directions of the Allahabad High Court requiring fresh physical notice and time-bound adjudication in a GST dispute involving a taxpayer whose registration had been cancelled before the show cause notice was issued.

A Bench of Justice Ujjal Bhuyan and Justice Atul S. Chandurkar, hearing a special leave issued notice returnable in eight weeks and stayed paragraphs 7 and 8 of the High Court’s judgment dated May 27, 2026.

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The Supreme Court passed the interim order on October 26, 2026, and directed that the matter be listed on January 27, 2027.

The stay is confined to the two specified paragraphs. The Supreme Court’s order does not expressly stay the High Court’s separate direction setting aside the earlier adjudication order and remitting the matter for a fresh decision.

The Allahabad High Court had set aside a GST adjudication order for failure to serve a physical notice after cancellation of registration. The Supreme Court has stayed the directions governing fresh notice and further proceedings while issuing notice on the taxpayer’s petition.

The proceedings originated from a show cause notice dated April 3, 2024, issued under Section 74 of the GST Act, 2017, for the financial year 2019–20. An adjudication order followed on July 10, 2024.

The taxpayer’s GST registration had already been cancelled by an order dated September 3, 2022. Despite this, the show cause notice was initially issued electronically by uploading it on the common portal.

Before the Allahabad High Court, the issue was whether the adjudication order suffered from a patent illegality because the taxpayer had been denied an effective opportunity to submit objections or participate in the adjudication proceedings.

The matter was heard by a Division Bench comprising Justice Saumitra Dayal Singh and Justice Arun Kumar.

The High Court referred to its decision in M/s Bambino Agro Industries Ltd. v. State of Uttar Pradesh & Anr. and recorded that the respondents themselves had recognised that adjudication against persons whose registrations had been cancelled should proceed upon service of physical notice.

Referring to the circular providing for that measure, the High Court observed that the requirement followed practical considerations.

It reasoned that, once registration was cancelled, the affected person was disabled from working on the common portal and, in any event, was relieved of the obligation to keep checking it thereafter.

Accordingly, the High Court considered physical service of an adjudication notice issued after cancellation to be appropriate under Section 169(1)(a) and (b) of the Uttar Pradesh GST Act, 2017.

The High Court found that no physical notice had been issued or served on the taxpayer.

It held that this substantially violated the rules of natural justice and may have prevented the taxpayer from filing objections or a reply to the show cause notice.

The Bench also emphasised that the taxpayer’s right to be heard was statutorily protected under Section 75(4) of the Act.

In view of that breach, the High Court considered it unnecessary to keep the writ petition pending or call for a counter-affidavit at that stage. It set aside the adjudication order dated July 10, 2024, and remitted the matter to the adjudicating authority for a fresh order strictly in accordance with law.

The High Court provided that the authority could issue a fresh notice through physical mode, accompanied by copies of the relied-upon documents, within ten days.

Paragraph 8 prescribed the subsequent procedure subject to service of the notice and documents, the taxpayer would have two weeks to submit a written reply physically. The authority could then fix a hearing after giving at least 15 days’ advance notice. Subject to compliance with those requirements, the taxpayer undertook to cooperate and refrain from seeking an adjournment. The proceedings were to conclude within two months of the taxpayer filing its reply.

These are the two paragraphs that the Supreme Court has now stayed.

While considering the taxpayer’s challenge, the Supreme Court directed “In the meanwhile, there shall be stay of paragraphs 7 and 8 of the impugned order of the High Court dated 27.05.2026.”

The order records that the petitioner appeared in person.

The Supreme Court has not, at this stage, delivered a final ruling on the validity of portal service after cancellation of GST registration. Nor does the brief order state the grounds on which the taxpayer challenged the High Court’s directions.

The distinction between the High Court’s findings and the Supreme Court’s interim intervention is therefore significant: the High Court set aside the original adjudication order for breach of natural justice, while the Supreme Court stayed the specified directions governing the fresh notice and subsequent adjudication process.

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