Facts of the Case:

In this case, the petitioner, a partnership firm registered under the CGST Act, challenged the order dated 05.02.2026 cancelling its GST registration. The cancellation order was founded on a show cause notice dated 13.08.2024, which had been issued on the ground that the petitioner had failed to furnish returns under Section 39 of the CGST Act.

The petitioner contended that after issuance of the show cause notice, the Proper Officer took no further action for nearly 18 months, and the registration was abruptly cancelled without any fresh notice or opportunity of hearing. The petitioner asserted that it became aware of the cancellation only when it attempted to file pending returns.

It was argued that the prolonged inaction rendered the earlier show cause notice ineffective and that the cancellation violated the proviso to Section 29(2) of the CGST Act, which mandates grant of a reasonable opportunity of being heard before cancellation of registration.

Issue:

Whether the Proper Officer can cancel a GST registration on the basis of a show cause notice issued nearly 18 months earlier, without issuing a fresh notice or affording a contemporaneous opportunity of hearing, after remaining inactive for a prolonged period.

Held That:

The Court observed that although a show cause notice had been issued on 13.08.2024, the Proper Officer had taken no action pursuant to it for more than 18 months. Such prolonged inaction rendered the notice stale and redundant, particularly when two financial years had intervened during which the petitioner was required to file further statutory returns and other relevant developments had occurred. The Court held that cancellation of registration based solely on such an outdated notice, without issuing a fresh notice or granting an effective opportunity of hearing, was unfair, unjust and contrary to the statutory mandate.

Accordingly, the order dated 05.02.2026 cancelling the petitioner’s GST registration was quashed. However, the Court clarified that the authorities were at liberty to initiate fresh proceedings under Section 29, if warranted by law and supported by relevant material, after following the prescribed procedure. It was further clarified that setting aside the cancellation order did not absolve the petitioner from complying with its statutory obligations under the GST law.

The High Court held that the impugned order cancelling the petitioner’s GST registration was unsustainable as it was not in conformity with the proviso to Section 29(2) of the CGST Act.

Case Name: S.R. Enterprise Versus The Union of India, The Principal Commissioner of Central Goods And Services Assam, The Superintendent Office of The Principal Commissioner of Central Goods And Service Tax Assam. Dated 24.06.2026

To read the complete judgement 2026 Taxo.online 1788