Gauhati HC Overturns GST Cancellation: Proper Notice Mandatory for Revocation

Introduction: Major Judgment on GST Process Compliance

In a significant legal development, the Gauhati High Court recently quashed the cancellation of a GST registration due to procedural lapse—specifically, the absence of proper notice to the taxpayer. The Court mandated that tax authorities must issue a valid show-cause notice and offer an opportunity to respond before cancelling any GST registration.

Case Snapshot: Devendra Singh Rathore v State of Assam

Petitioner: Devendra Singh Rathore, a wood-based unit operator in Changlang, Arunachal Pradesh.

Background: Rathore’s factory was non-operational during FY 2023–24 due to raw material shortage. The GST registration was cancelled on December 4, 2023, based on a show-cause notice dated October 11—which, according to the petitioner, was never received through email, post, or the GST portal.

Court’s Ruling: Due Process Cannot Be Sidestepped

The Gauhati HC ruled in favor of the petitioner, highlighting key issues in the process:

• No proper show-cause notice (SCN) was served under Section 29 and Rule 22 of the CGST Act.
• The action violated principles of natural justice by not giving the petitioner a fair opportunity to respond.
• The cancellation was carried out mechanically, with vague and inconsistent statements in official communication.

Court Orders Remedial Measures

Rather than simply reversing the cancellation, the Court offered a balanced approach:

• The registration cancellation was set aside and the revocation application reactivated.
• The taxpayer must file all pending GST returns, and pay relevant taxes, interest, penalties, and late fees.
• The Court also ensured the protection of limitation timelines during the appeal process.

Broader Implications for GST Enforcement

This case sets a precedent for both businesses and GST officials:

• Proper Notice is Critical: Notices must be served in an approved format, not just via portal alerts or vague emails.
• Opportunity to Respond: Authorities must allow time and access for taxpayers to reply to any show-cause notices.
• Automated Actions Can Be Challenged: Courts are stepping in to check arbitrary cancellations done without due process.
• Taxpayer Rights Upheld: Even when appeal windows lapse, revocation applications can be revived if errors in procedure are proven.

Expert Opinions and Industry Reactions

“Gauhati HC sets aside order rejecting revocation … GST registration was canceled without providing proper notice.” – TaxScan Report

“Improper GST registration cancellations set aside due to vague notices and procedural lapses.” – BT Associates

“High court restricts its scope … cancellation by issuing the Impugned SCN …” – Legal Commentary

Conclusion: A Win for Procedural Fairness

The Gauhati High Court’s decision serves as a strong reminder that GST compliance must adhere to procedural fairness. It ensures that tax departments cannot cancel registrations without giving businesses their legal right to respond. This ruling sets a powerful precedent in favor of transparency and justice in tax administration.