Facts of the Case:
In this case, the petitioner challenged actions of the GST authorities i.e. a show-cause notice dated 10.09.2025 proposing cancellation of GST registration under Rule 21(e) of the CGST Rules read with Section 16 of the CGST Act; an order dated 31.10.2025 rejecting the application for revocation of cancellation.
The show-cause notice merely alleged that the petitioner had “availed input tax credit in violation of Section 16 of the Act and the Rules made thereunder,” without specifying the tax period, invoices, suppliers, or quantum of alleged ineligible ITC. The petitioner filed a detailed reply objecting to the vagueness of the notice and contended that in the absence of particulars, it was impossible to furnish an effective response. The record further revealed that prior to issuance of the cancellation order, the Joint Director had, by communication dated 08.08.2025, requested the Principal Commissioner, CGST, to cancel the petitioner’s registration during the pendency of investigation. Pursuant to this request, the Proper Officer passed the cancellation order dated 25.08.2025.
Subsequently, the petitioner sought revocation of cancellation. A communication styled as a show-cause notice dated 26.09.2025 referred to an interim DGGI investigation report alleging wrongful availment of ITC of Rs. 8.26 crore not reflected in GSTR-2B and stated that the application was liable to be rejected. Despite submission of a reply, the revocation application was rejected on 31.10.2025 by reiterating the same reasons without independent analysis. The Petitioner contended that the cancellation was based on dictation from the investigating wing, the show-cause notice was vague, and the orders were non-speaking and violative of principles of natural justice.
Issue:
Whether the Proper Officer had exercised independent quasi-judicial power under Section 29 of the CGST Act read with Rule 21(e), or had acted under dictation of the investigating authority.
Held that:
The show-cause notice was found to be wholly vague, as it merely reproduced the language of Section 16 without specifying the tax period, invoices, suppliers, or quantification of alleged ineligible ITC. A notice intended to form the basis of adverse civil consequences must disclose foundational facts; otherwise, the opportunity of hearing becomes illusory. The Court held that such vagueness strikes at the root of natural justice. On examining the sequence of events, the Court observed that the cancellation order was issued in response to a communication from the investigating authority during the pendency of investigation. There was nothing on record to demonstrate independent application of mind by the Proper Officer. Relying on the principle laid down in Orient Paper Mills Ltd. v. Union of India, the Court reiterated that a quasi-judicial authority must exercise its statutory discretion independently and cannot act under dictation of a superior or investigating authority.
The Court emphasized that cancellation of GST registration has serious civil consequences and cannot be used as a coercive measure during investigation. The statutory framework provides adequate machinery for adjudication and recovery; cancellation must be based on objective satisfaction of jurisdictional facts and adherence to due process.
Accordingly, the Court set aside the show-cause notice dated 10.09.2025, the cancellation order dated 25.08.2025, and the order dated 31.10.2025 rejecting revocation.
Case Name: Shashi Kumar Choudhury Versus Union of India, Principal Commissioner Central Goods And Services Tax Guwahati, Assistant Commissioner CGST Range-I Guwahati, Superintendent CGST And CX Guwahati. dated 17.02.2026
