The Allahabad High Court has quashed a GST registration cancellation order and the underlying Show Cause Notice (SCN), holding that a system-generated notice lacking the name and designation of the issuing authority is legally unsustainable.
The bench of Justice Swarupama Chaturvedi and Justice Salil Kumar Rai reaffirmed that statutory powers under the Central Goods and Services Tax Act, 2017 must be exercised by authorized officers and not by an anonymous automated system.
The petitioner approached the Allahabad High Court challenging an ex-parte order dated March 26, 2025, through which its GST registration had been cancelled. The petitioner also sought quashing of the Show Cause Notice dated February 11, 2025, which had initiated the cancellation proceedings and requested restoration of its GST registration.
The matter came before a Division Bench comprising Justice Salil Kumar Rai and Justice Swarupama Chaturvedi.
The Court noted that the controversy was identical to the issue already decided by another Division Bench in M/s M Y Ent Bhatta v. State of U.P. & Another (Writ Tax No. 546 of 2025), decided on May 13, 2025. Accordingly, the Bench reproduced and relied upon the reasoning adopted in that earlier judgment.
In the earlier case, the taxpayer had received a notice for cancellation of GST registration due to non-filing of returns for six consecutive months. The notice contained the statement: “Jurisdictional Officer System Generated Notice, Contact Jurisdiction Office for further process.”
Court Rejects ‘System Generated Notice’ Concept
The High Court emphasized that the authority to issue statutory notices is vested in designated officers under the GST law and not in an automated system. Therefore, a notice merely stating that it is system-generated, without identifying the officer responsible for issuing it, cannot form the basis of adverse proceedings against a taxpayer.
The State attempted to justify the notice by relying on a GSTN advisory concerning issuance of notices and orders without digital signatures. The advisory explained that since officers log into the GST portal using digital authentication, documents generated through the portal need not necessarily bear digital signatures.
However, the Court distinguished between absence of a digital signature and absence of identification of the issuing authority. It observed that the advisory could at best explain cases where the notice contains the name and office of the issuing authority but lacks a digital signature. The advisory could not validate a notice that did not disclose either the name or designation of the officer and merely described itself as “system generated.”
The Bench categorically held that since statutory powers are vested in officers and not in the computer system itself, issuance of a notice without disclosure of the issuing authority was contrary to the CGST Act and Rules. Such a notice was described as being dehors the Act and the Rules and therefore incapable of sustaining consequential proceedings.
The Court further observed that cancellation orders founded upon such defective notices cannot survive judicial scrutiny.
Applying the principles laid down in the earlier judgment, the Allahabad High Court allowed the writ petition and quashed both the Show Cause Notice dated February 11, 2025 and the consequential GST registration cancellation order dated March 26, 2025.
At the same time, the Court preserved the department’s right to initiate fresh proceedings in accordance with law, if circumstances so warrant.
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