Facts of Case: In this case, the petitioner challenged the Show Cause Notice dated 15.07.2026 proposing cancellation of its GST registration and the consequential cancellation order dated 30.07.2026. The SCN stated that the petitioner’s enterprise had been identified in a list prepared by the Office of the Principal Chief Commissioner. In the cancellation order, the petitioner’s enterprise was reported to be a “fake” enterprise. The petitioner had replied to the SCN stating that proceedings had already been initiated by the State authorities and that its representative was regularly attending those proceedings.

The petitioner contended before the High Court that no physical verification of its business premises had been conducted and, consequently, there was no independent satisfaction of the proper officer that the enterprise was fake. The Revenue, on the other hand, relied upon the petitioner’s response to the SCN and defended the cancellation.

Issue: Whether GST registration can be cancelled under Section 29(2)(e) of the CGST Act on the basis of an enterprise being identified in a departmental “fake enterprise” list, without physical verification of the taxpayer’s business premises as contemplated under Rule 25 of the CGST Rules?

Held That:

The Court noted that the allegation against the petitioner was essentially that it was a “fake enterprise”, i.e., an enterprise which was not actually carrying on business despite obtaining GST registration. In such circumstances, the mere fact that the petitioner’s name appeared in a list prepared by the Office of the Principal Chief Commissioner could not, by itself, substitute for an independent verification by the proper officer. The Court held that where action under Section 29(2)(e) is initiated on the basis of such a list, the proper officer ought to ensure physical verification of the petitioner’s business premises and, upon such verification, record appropriate satisfaction before proceeding with cancellation.

The Court also referred to Rule 25 of the CGST Rules, which provides for physical verification of the place of business where the proper officer is satisfied that such verification is required after grant of registration. In the present case, the petitioner had also placed on record copies of notices and summons issued by the State authorities along with a copy of DRC-03. These circumstances, according to the Court, further warranted proper verification rather than cancellation merely on the basis of the departmental list.

The Karnataka High Court allowed the writ petition and quashed both the Show Cause Notice dated 15.07.2026 and the cancellation order dated 30.07.2026. The Court examined Section 29(2)(e) of the CGST Act, which empowers the proper officer to cancel registration where the registration has been obtained by means of fraud, wilful misstatement or suppression of facts, after providing due opportunity to the taxpayer.

Case Name: M/s Nobel Enterprises Versus The Superintendent Of Central Tax West Divison-7, Office Of The Commissionerate.

Citation No. 2026 Taxo.online 2778