Registration Cancellation Without Reasoned Order Held Invalid | HC

Case Details: G R Nirmolia and Co vs. Union of India - [2025] 173 taxmann.com 602 (Gauhati)

Judiciary and Counsel Details

• • Manish Choudhury, J.
  • S. K. Agarwal & M. Agarwal, Advs. for the Petitioner.

Facts of the Case

The petitioner, a registered assessee under the CGST Act, was issued a show cause notice proposing cancellation of registration on the ground of non-filing of returns for a continuous period of six months. The show cause notice called upon the petitioner to furnish a reply and appear before the Proper Officer. The petitioner neither submitted a reply to the show cause notice nor appeared before the Proper Officer on the scheduled date. Thereafter, the Proper Officer issued an order cancelling the petitioner’s registration without assigning any specific reasons for such cancellation. The cancellation order did not assign any reason for cancellation apart from stating non-filing of returns for a continuous period of six months. Aggrieved by the cancellation order, the petitioner filed a writ petition before the Gauhati High Court challenging the order on the ground that it was passed without application of mind and in violation of the prescribed procedure.

High Court Held

The Hon’ble Gauhati High Court held that the cancellation order was not sustainable as it failed to comply with the procedural requirements set out under the CGST Act and the prescribed format in FORM GST REG-19. The Court held that the fact that the petitioner did not respond to the show cause notice or appear before the Proper Officer did not absolve the authority of its statutory obligation to pass a reasoned and speaking order. It was held that an order having adverse civil consequences must not be issued as a mere formality and must demonstrate application of mind. The Court observed that the absence of reasons in the impugned order rendered it a non-speaking order passed without due consideration. It was held that the authority exercising power of cancellation must record its reasons to ensure that the exercise of power is not arbitrary. On this basis, the High Court set aside the impugned cancellation order.