HC Quashes GST Cancellation for Non-Speaking SCN

Case Details: Sri Laxmi Narasimha Metals vs. Appellate Joint Commissioner of State Tax (S.T.) [2026] 186 taxmann.com 308 (Telangana)

Judiciary and Counsel Details

• P. Sam Koshy & Narsingh Rao Nandikonda, JJ.

Facts of the Case

The petitioner, a registered person under GST, was issued a show cause notice (SCN) in Form REG-17 proposing cancellation of registration without disclosing the specific contraventions or shortcomings forming the basis for the proposed action. Pursuant thereto, an order in Form REG-19 was passed cancelling the GST registration of the petitioner. A statutory appeal in Form APL-04 was preferred, which was dismissed. In writ proceedings, the petitioner challenged the SCN, cancellation order, and appellate order, contending that the proceedings were non-speaking and devoid of the mandatory particulars required for effective adjudication. The Department of Revenue did not dispute the absence of particulars in the SCN. It also alleged fraudulent availment of Input Tax Credit (ITC). The matter was accordingly placed before the High Court.

High Court Held

The High Court held that mere participation by the petitioner in appellate proceedings could not cure the foundational defect arising from a non-speaking SCN. The Court held that Section 29 of the CGST Act and the Telangana GST Act read with Rule 21 and Rule 22 of the CGST Rules and the Telangana GST Rules prescribed a specific mode, procedure, and manner for cancellation of registration, mandating issuance of a detailed SCN specifying the alleged contraventions and shortcomings. It was observed that the absence of such particulars deprived the taxable person of responding to the allegations and rendered the initiation of proceedings legally unsustainable. It was further held that the cancellation order and the appellate order affirming such cancellation could not survive independently when the foundational SCN itself suffered from a substantive legal defect. Accordingly, the SCN, cancellation order, and appellate order were set aside.