The Bombay High Court has held that cancellation of GST registration without proper reasoning and consideration of the taxpayer’s explanation is arbitrary, mechanical, and violative of principles of natural justice, ordering restoration of the registration.
The bench of Justice G. S. Kulkarni and Justice Aarti Sathe has observed that cancellation of GST registration has serious civil consequences and cannot be undertaken casually. It reiterated that a show cause notice must contain clear and specific reasons to enable an effective response, failing which any consequential order becomes legally unsustainable.
The Court examined the legality of cancellation of GST registration and rejection of its revocation application.
The petitioner, a proprietary concern engaged in the business of collecting and supplying used plastic bottles for recycling, had obtained GST registration in March 2023 and was regularly discharging its tax obligations. However, due to the proprietor suffering from severe health issues—specifically Stage V chronic kidney disease—the business temporarily came to a standstill.
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Despite this, the department conducted a field inspection and reported that no business activity was being carried out at the registered premises. Based on this, a show cause notice was issued under Section 29 of the CGST Act read with Rule 21(a), alleging that the taxpayer was non-operational. Subsequently, the registration was cancelled, and later, the application for revocation was rejected through an ex-parte order.
The petitioner argued that detailed replies were submitted explaining the temporary closure due to medical reasons and that the business had not been permanently discontinued. It was contended that the authorities failed to consider these submissions and proceeded mechanically.
Agreeing with the petitioner, the High Court observed that both the show cause notices and the impugned orders lacked any reasoning or discussion of the taxpayer’s reply. The Court noted that the orders were passed in a “standardised manner” without application of mind and failed to address the genuine circumstances faced by the petitioner.
The Court held that the authorities ignored the petitioner’s bona fide explanation regarding illness, which had temporarily disrupted business operations. Such disregard, the Court said, renders the action high-handed and arbitrary.
Relying on earlier precedents including Makersburry India Pvt. Ltd. and Monit Trading Pvt. Ltd., the Court reiterated that vague notices and non-speaking orders violate principles of natural justice and must be set aside.
The High Court quashed the show cause notices as well as the orders cancelling the GST registration and rejecting the revocation application. It directed that the petitioner’s GST registration be restored, while granting liberty to the department to initiate fresh proceedings in accordance with law by issuing a proper, reasoned notice and granting an opportunity of hearing.
Case Details
Case Title: G.B. Traders Vs Union of India & Ors.
Citation: JURISHOUR-865-HC-2026(BOM)
Case No.: Writ Petition No. 8990 Of 2025
Date: 01/04/2026
Counsel For Petitioner: Ankita Vashistha
Counsel For Respondent: Mamta Omle
