HC Upholds GST Registration Cancellation for Non-Functional Premises

Case Details: JD Enterprises vs. State of Bihar - [2025] 178 taxmann.com 397 (Patna) 

Judiciary and Counsel Details

• Rajeev Ranjan Prasad & Sourendra Pandey, JJ.
• D.V. Pathy, Sr. Adv., Sadashiv Tiwari, Ms Prachi Pallavi, Hiresh Karan & Ms Shiwani Dewalla, Advs. for the Petitioner.
• Vikash Kumar, Standing Counsel for the Respondent.

Facts of the Case

The petitioner, engaged in coal trading, was registered under the CGST Act and the Bihar GST Act with declared business places. During inspection by departmental authorities, the premises were found non-functional, books of account were not produced, and the registered mobile number was not linked to the declared address. The landlord confirmed that only a small rented room with a display board was being used for bill trading. A show-cause notice was issued alleging non-existent business activity. The petitioner submitted a written response that did not disprove the inspection findings. Upon consideration of the reply, the Joint Commissioner cancelled the GST registration. The petitioner challenged the cancellation order before the High Court.

High Court Held

The High Court of Patna held that the show cause notice was properly served and reasoned, and that the petitioner was given adequate opportunity to respond. The petitioner did not contest the inspection findings, and the authorities’ conclusion of a non-existent business with intent to pass on ineligible ITC was supported by evidence. The Court found the cancellation order to be a lawful exercise of power under Section 29 of the CGST Act and the Bihar GST Act, read with Rule 21 of the CGST Rules and the Bihar GST Rules. It further held that the writ jurisdiction would not interfere with such factual findings, especially when an appellate remedy under Section 107 was available. Accordingly, the writ petition was dismissed, and the cancellation of GST registration was upheld.