Cancellation of GST Registration via Non-Speaking Order Violates Rule 22 and Principles of Natural Justice

The petitioner, a proprietor of a security service business, held a GST registration under the CGST/SGST Acts since 2018

On 05.11.2024, the Assistant Commissioner of State Tax issued a Show Cause Notice (SCN) alleging failure to furnish returns for a continuous period of six months, and concurrently suspended the registration

The petitioner failed to respond to the SCN or appear for the scheduled hearing on 03.12.2024, citing financial distress and oversight

Consequently, on 10.02.2025, the Proper Officer passed an order cancelling the petitioner’s GST registration effective from that date

The petitioner challenged this order via a writ petition, arguing it was non-speaking, arbitrary, and passed without application of mind

1. Whether the impugned order of cancellation dated 10.02.2025 is legally sustainable given that it assigned no specific reasons for the decision.

2. Whether the failure of an assessee to respond to a Show Cause Notice absolves the Proper Officer from the statutory obligation to pass a speaking order.

Section 29(2) of the CGST Act, 2017, which empowers officers to cancel registration for non-filing of returns

Rule 22 of the CGST Rules, 2017, specifically sub-rule (3) and FORM GST REG-19, which mandates the issuance of a formal order determining tax arrears and assigning reasons for cancellation

Principle of Natural Justice, asserting that any order entailing adverse civil consequences must be a "speaking order" that demonstrates a conscious application of mind

The court found that the Proper Officer failed to comply with the procedural requirements of Rule 22(3) and FORM GST REG-19

Although the SCN was served, the final cancellation order merely cited "Others" and referred back to the rule numbers without articulating the specific grounds or the period of default

The court reasoned that the cancellation of GST registration carries severe civil consequences, effectively barring a citizen from legitimate business; therefore, the process cannot be treated as a "mere paper formality"

Even in ex-parte proceedings where the assessee fails to reply, the Proper Officer is legally bound to record reasons to prevent arbitrary action and allow for judicial review

Regarding the delay in filing the petition, the court held that the inherent illegality of a non-speaking order outweighed the petitioner’s laches

The Court directed that the petitioner be granted one month to either reply to the SCN or to file all pending returns with the requisite tax, interest, and late fees; Upon compliance, the Proper Officer is directed to pass a fresh, reasoned order within one month thereafter