The Hon’ble Allahabad High Court in Kanhaiya Traders v. State of U.P. [Writ Tax No. 2292 of 2025 dated May 16, 2025], has held that the cancellation of GST registration without issuance of physical/ offline notice to the assessee prior to adjudication order amounts to violation of natural justice, and therefore the cancellation order is to be set aside with directions to afford the assessee opportunity to submit final reply and personal hearing before passing a fresh order.
Facts:
The registration of Kanhaiya Traders (“the Petitioner”) was cancelled under the Uttar Pradesh Goods and Services Tax Act, 2017 with effect from March 28, 2024. The State of U.P. (“the Respondent”), claimed that show cause notices were issued to the Petitioner electronically for the financial year 2018–19 and that an adjudication order dated June 13, 2024 was passed accordingly.
However, the Petitioner submitted that no physical or offline notice had ever been issued or served prior to the passing of the said order. The Respondent also did not dispute this fact.
The Petitioner challenged the order of cancellation on the ground that it was passed in violation of the principles of natural justice.
Issue:
Whether the cancellation of GST registration without service of a physical or offline notice, and without giving the Petitioner an opportunity of personal hearing, violates the principles of natural justice.
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 2292 of 2025 held as under:
- In view of the above, it does merit acceptance that the petitioner was not obligated to visit the GST portal to receive the show cause notices that may have been issued to the petitioner for the period 2018-19 through electronic mode, preceding the adjudication order dated June 13, 2024 passed in pursuance thereto.
- It is also not the case of the revenue that any physical or offline notice was issued to or served on the petitioner before the impugned order came to be passed.
- In view of these peculiar facts, no useful purpose may be served in keeping the petition pending or calling counter affidavit at this stage or relegating the petitioner to the forum of alternative remedy.
- Since the essential requirement of the rules of natural justice remained unfulfilled, the order dated June 13, 2024 was set aside.
- The petitioner was directed to treat the said order itself as the notice and submit its final reply thereto within a period of four weeks from the date of the order.
- Subject to such compliance by the petitioner, a fresh order was to be passed after affording an opportunity of personal hearing as expeditiously as possible, preferably within a period of three months from the date of compliance.
- The writ petition was disposed of accordingly.
Our Comments:
The judgment of the Allahabad High Court highlights the fundamental importance of adhering to natural justice principles before taking coercive actions like cancellation of registration. Where physical service of notice has not been effected and no opportunity of hearing is granted, such cancellation orders cannot sustain.
The requirement of physical or proper service of notice is not a mere procedural formality. Section 29 of the CGST Act mandates that before cancellation of registration the authority must issue a show‑cause notice and give the assessee an opportunity to reply. Rule 22(1) of the CGST Rules fortifies this by requiring that the notice in FORM GST REG‑17 be served—implicitly by physical or any recognised mode—within seven working days from service. The Court’s observation that no physical or offline notice was served underscores a fundamental breach of this mandate. Thus, it is a safeguard embedded in the law to ensure fair opportunity to the taxpayer. The Court correctly noted that an assessee whose registration stands cancelled cannot be expected to check the GST portal for fresh show cause notices unless formally informed.
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