GST registration must be restored if the taxpayer proves transactions with the allegedly fictitious supplier were genuine.

The petitioner’s GST registration was cancelled after a show-cause notice dated 13 May 2025 alleged a breach of Rule 21(b) of the CGST Rules, but referred only to issuing invoices or bills without supply of goods or services.

The petitioner said it had replied, though it could not produce the reply or its acknowledgment.

A later notice concerning its application to revoke the cancellation specified that the petitioner had allegedly availed ineligible ITC of ₹8,87,014 for FY 2024–25 from M/s S M Traders, described as a non-existent or fake entity; the petitioner did not respond to that notice.

The revocation application was rejected, and the appeal was dismissed.

The petitioner challenged the appellate order, the revocation rejection, the related notice, the cancellation order and the original cancellation notice.

1. Whether the Court should interfere with the original show-cause notice as vague, or instead restore the proceedings and allow the petitioner to respond.

2. Whether the appellate order and the orders rejecting revocation and cancelling registration should be set aside, with the proceedings restored to the proper stage.

The Court considered Article 226 of the Constitution and the statutory framework invoked in the challenged proceedings: Rule 21(b) of the CGST Rules, concerning cancellation-related grounds; Rules 22(1) and 22(3), concerning cancellation proceedings; Rule 9(4), concerning rejection of an application for revocation; and Section 107(11), concerning the appellate order.

The Court’s reasoning turned on procedural fairness and the need for the appellate authority to consider the circumstances and factual matrix. It did not cite or apply any precedent.

The Court declined to quash the original notice as vague because the petitioner had not shown that it raised that objection at the initial stage or placed its alleged reply on record.

However, the later notice identified the specific allegation—ITC claimed from a non-existent or fake entity—and the petitioner asserted that it could produce documents showing the transaction was genuine.

The Court considered that the appellate authority should have addressed the circumstances and factual issues, and concluded that the matter should return to the original proceedings so the petitioner could respond and produce supporting documents.

The Court quashed the appellate order dated 1 December 2025, the rejection of the revocation application dated 6 August 2025, the related notice dated 23 July 2025 and the cancellation order dated 23 May 2025; it did not quash the original show-cause notice dated 13 May 2025.

The petitioner was permitted to respond to that notice by 27 October 2026 and submit documents concerning the genuineness of the transactions.

The third respondent was directed to conclude the proceedings expeditiously and, in any event, by 30 November 2026.

The Court stated that if the petitioner produced documents demonstrating the transaction’s genuineness, the GST registration must be restored.