Quashing a supplier’s GST cancellation justifies restoring the recipient’s proceedings to the show-cause stage.

The petitioner challenged orders under Sections 74(9) and 107 of the CGST/KGST Acts concerning tax periods 2023–24 and 2024–25, as well as a garnishee notice in Form GST DRC-13 under Section 79(1)(c).

The Section 74 proceedings arose from the petitioner’s transactions with M/s Parmeshwari Distributor, whose GST registration had been cancelled on 20 December 2024, retrospectively from 23 August 2023.

In a separate writ petition, the High Court quashed that cancellation decision on 6 June 2025 and restored the cancellation proceedings for reconsideration; the registration was subsequently restored.

The petitioner’s response to the tax show-cause notices had sought to await the outcome of those proceedings.

1. Whether, despite dismissal of the petitioner’s appeals under Section 107, the proceedings should be restored to the show-cause-notice stage to allow a further response and fresh consideration by the adjudicating authority.

2. Whether the challenged orders and the garnishee notice should be quashed in consequence of restoring the proceedings.

Sections 74 and 74(9) of the CGST/KGST Acts govern the show-cause and adjudication proceedings concerning the alleged tax liability; Section 107 provides for an appeal against the adjudication order; and Section 79(1)(c) concerns recovery by notice to a third party.

The Court applied the procedural principle that, in the circumstances of this case, the petitioner should have an opportunity to place relevant circumstances and grounds before the adjudicating authority for a fresh decision.

The judgment did not rely on any cited precedent.

The tax proceedings were premised on the cancellation of the supplier’s registration.

Since that cancellation had been quashed and the registration restored, the premise underlying the show-cause notices had materially changed.

The petitioner had also sought to await the outcome of the supplier’s restored cancellation proceedings.

In those circumstances, the Court considered it appropriate to reopen the matter at the show-cause stage, enabling the petitioner to provide a further response and the Deputy Commissioner to consider all relevant circumstances and decide afresh.

It quashed the specified orders-in-appeal, adjudication orders, summaries of the orders, and the Form GST DRC-13 notice, restoring the proceedings to the show-cause-notice stage.

The petitioner was directed to file a response without further notice on 24 October 2026, and the Deputy Commissioner was directed to examine the circumstances and pass a detailed order.