GST registration cancellation cannot rest on allegations absent from the show-cause notice.

The petitioner, a government contractor registered under the GST law with GSTIN 24ABCFK3129P1Z5 from 7 January 2025, was first issued a show-cause notice dated 13 August 2025 under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017, alleging that its registration had been obtained through fraud, wilful misstatement, or suppression of facts. The notice relied on a Directorate General of GST Intelligence letter stating that no business activity was being conducted at the declared premises. After the petitioner’s reply, the cancellation proceedings were dropped by order dated 2 September 2025 in Form GST REG-20.

Subsequently, the same officer issued another show-cause notice dated 6 April 2026 under Section 29(2)(e), based on substantially identical allegations and material. The petitioner replied, referring to the earlier dropping of proceedings, but its registration was cancelled retrospectively from 7 January 2025 by order dated 17 April 2026 in Form GST REG-19.

In the writ petition, the respondents additionally alleged fraudulent availment and passing on of ineligible input tax credit to various firms, although that allegation had not been specifically set out in the show-cause notice.

Whether the second show-cause notice and the consequential cancellation order were liable to be quashed because they were founded on substantially the same allegations and material as the earlier proceedings that had already been dropped.

Whether the cancellation order could validly rely on allegations of fraudulent availment and passing on of ineligible input tax credit when the petitioner had not been specifically called upon to answer those allegations in the show-cause notice.

Whether the impugned proceedings suffered from non-application of mind and denial of a proper opportunity to respond to the case ultimately relied upon by the authorities.

The Court applied Section 29(2)(e) of the Central Goods and Services Tax Act, 2017, which permits cancellation of GST registration where it has been obtained through fraud, wilful misstatement, or suppression of facts.

It further applied the principles of natural justice and procedural fairness, including the requirement that a person must receive a clear and adequate show-cause notice setting out the allegations and grounds on which adverse action is proposed, and must be afforded an effective opportunity of hearing. The Court also relied on the principle that administrative authorities must apply their minds to the relevant material and cannot sustain an order on grounds not stated in the show-cause notice.

The Court found that both show-cause notices alleged that the petitioner had obtained GST registration through fraud, wilful misstatement, or suppression of facts and were based on substantially identical communications from the DGGI concerning the alleged absence of business activity at the declared premises. The earlier proceedings on the same basis had already been dropped by the same officer. The subsequent notice and cancellation order therefore reflected non-application of mind.

More importantly, the cancellation order relied upon allegations that the petitioner had fraudulently availed and passed on ineligible input tax credit to various firms, although the petitioner had never been called upon through the show-cause notice to answer those allegations. The order thus travelled beyond the notice and denied the petitioner an effective opportunity to meet the case against it. The Court accordingly held that the impugned notice and order could not be sustained, while clarifying that it had not adjudicated the merits of the underlying allegations.

The respondents were left at liberty to issue a fresh, legally valid show-cause notice and undertake further proceedings in accordance with law after providing the petitioner an adequate opportunity of hearing. The petitioner was directed to cooperate with such proceedings. The Court expressly left all merits-related contentions open.