Facts of the Case:

In this case, the petitioner filed writ petition challenging the validity of the show cause notice and consequential order, whereby the GST registration of the petitioner firm was cancelled on the ground that it had been filing NIL returns for the preceding two years. The petitioner contended that such a ground is not contemplated under Section 29(2) of the CGST Act, 2017, which governs cancellation of registration. It was argued that the proper officer had exercised powers beyond the statutory framework by treating the filing of NIL returns as a basis for cancellation. In support of this contention, reliance was placed on the judgment of Kali Shanker Enterprises vs. Additional Commissioner GST, wherein it was held that filing NIL returns does not constitute a valid ground for cancellation of GST registration.

Issue:

Whether GST registration can be cancelled merely on the ground that the taxpayer has been filing NIL returns for a continuous period?

Held that:

he Court held that the power to cancel GST registration is strictly governed by the provisions of Section 29(2) of the CGST Act, which exhaustively enumerates the circumstances under which such cancellation can be effected. Upon examining the statutory framework, the Court found that “filing of NIL returns” is not one of the grounds contemplated under the said provision. The authority, therefore, acted beyond its jurisdiction in initiating cancellation proceedings solely on this basis.

The Court further concurred with the view expressed by the Andhra Pradesh High Court in Kali Shanker Enterprises, holding that administrative convenience or assumptions about inactivity cannot substitute statutory conditions. Since the very foundation of the show cause notice was legally untenable, both the notice and the consequential cancellation order were held to be unsustainable in law. Accordingly, the impugned show cause notice and cancellation order were quashed, and the writ petition was allowed.

Case name: Surya Build Creations Versus Commissioner, State Goods and Services Tax, and another dated 31.03.2026

To read the complete judgement 2026 Taxo.online 793