Non-Furnishing of Bank Details Not Grave Enough for Cancellation; HC Restores Registration.

Issue

Whether the retrospective cancellation of GST registration is a proportionate and valid penalty for the mere procedural lapse of not furnishing bank account details (Rule 10A), especially when the Show Cause Notice (SCN) was vague and the statutory appeal was rejected as time-barred.

Facts

The Petitioner: A proprietary concern engaged in works contracts.
The Default: The petitioner failed to furnish/upload their bank account details on the GST portal as required under Rule 10A of the CGST Rules.
Department’s Action: The proper officer issued a Show Cause Notice (SCN) alleging this violation. Subsequently, the registration was cancelled retrospectively.
The Delay: The petitioner, who had paused business due to losses, learned of the cancellation only upon attempting to resume operations. They filed an appeal with a delay condonation request.
Appellate Rejection: The Appellate Authority rejected the appeal solely on the ground that it was filed beyond the maximum condonable period allowed under the Act.
Challenge: The petitioner approached the High Court, arguing that the SCN was vague and the punishment (cancellation) was disproportionate to the lapse.

Decision

The Telangana High Court ruled in favour of the assessee and set aside the cancellation order.
Proportionality: The Court held that the only lapse was the non-uploading of bank account details. This is a procedural non-compliance and is “not so grave” as to warrant the extreme step of cancellation, which amounts to the “civil death” of a business.
Vague SCN: The Court found the SCN to be vague as it did not disclose specific shortcomings or provide a reasonable time to cure the defect.
Revenue Interest: The Court observed a practical point: cancelling a registration does not advance the interest of the Revenue (as no tax can be collected). In contrast, restoring the registration—subject to payment of late fees and penalties—generates immediate revenue and allows the business to contribute future taxes.
Service of Notice: The department failed to prove effective service of the notices beyond mere postal dispatch.
Restoration: The Court permitted the restoration of the registration, subject to the petitioner depositing the applicable late fees, fines, or penalties and complying with the filing requirements.

Key Takeaways

Rule 10A Violation is Curable: Missing the deadline to update bank details is a common procedural error. Courts view cancellation for this specific lapse as excessive and are inclined to restore registration upon compliance.
Revenue Logic: The judgment reinforces the logic that the tax department’s goal is to collect tax, not to shut down businesses for minor technical defaults.
Writ Remedy for Time-Barred Appeals: Even if the statutory appeal is time-barred, the High Court can intervene under Article 226 to restore a registration if the cancellation order is found to be arbitrary or disproportionate.
Specific SCN: An SCN must be specific about the defect and offer a clear opportunity to rectify it. Vague notices are legally unsustainable.

HIGH COURT OF TELANGANA

Gayathri Infra Developers

Deputy State Tax Officer^*

P. Sam Koshy and SUDDALA CHALAPATHI RAO, JJ.

WRIT PETITION No. 32295 of 2025

OCTOBER 27, 2025

K.P. Amarnath Reddy, Learned counsel for the Petitioner. Swaroop Oorilla, Learned Special Govt. Pleader for the Respondent.

ORDER

P. Sam Koshy, J.- Heard Mr. K.P. Amarnath Reddy, learned counsel for the petitioner; and Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax for the respondents.

2. The instant writ petition has been filed by the petitioner under Article 226 of the Constitution of India assailing the order dated 26.08.2024, (Annexure P-3) passed the respondent No.1, whereby the GST registration of the petitioner stood cancelled w.e.f. 12.07.2023 on the ground of alleged violation of Rule 21(d) and Rule 10A (Bank details). The petitioner has also challenged the order dated 10.10.2025, (Annexure P5) passed by respondent No.2, whereby the appeal preferred by the petitioner against cancellation of GST registration also stood rejected.

3. The facts of the case are that the petitioner is a propriety concern engaged in the business of works contract. The petitioner got itself registered with GSTN No.36DQSPG6583F1ZA under the GST Act. The petitioner was issued with a registration certificate on 12.07.2023, based on which the petitioner was carrying on his business. However, because of the loss incurred by the petitioner in business, he could not carry on the business to its fullest extent till the year 2024. Subsequently, upon arranging certain funds from his close associates and friends, the petitioner again intended to carry on the business. It was then in July, 2025, that the petitioner was informed by respondent No.1 about his GST registration getting cancelled and when he enquired from the GST portal it was learnt that a show cause notice was initially issued on 01.03.2024 alleging violation of Rule 21(d) and Rule 10A (Bank Details). According to the petitioner, the registration got cancelled on account of the petitioner not furnishing the bank account details with the Department, which was primarily on account of ignorance and not having full knowledge so far as the requisite compliance is concerned and the consultant who had assisted him in obtaining registration certificate also did not make him aware of the formalities and compliances those are required to be done. In order to make good the default, the petitioner immediately approached the Appellate Authority i.e. respondent No.2 on 26.07.2025 along with a condone delay petition. However, the respondent No.2 without properly appreciating the factual matrix of the case and the ground under which the condonation of delay was sought, in a mechanical manner rejected the appeal on the ground of it being beyond the condonation of delay prescribed under Section 107(1) and Section 107(4) of the CGST Act.

4. Learned counsel for the petitioner, at the outset, contended that the lapse on the part of the petitioner in not timely uploading the bank account details was neither deliberate nor with any mala fides and with an intention to take any added advantage. But because of being totally ignorant of the same and unaware of the requirement and unaware of the consequences. According to the learned counsel for the petitioner, the petitioner had also preferred a fresh revocation application, however the GST portal did not permit the petitioner to file a fresh revocation application.

5. Learned counsel for the petitioner submits that in order to survive and revive the business, requirement of restoration of GST registration has become necessary and the petitioner is also in the process of getting certain works contract and for which reason also, the restoration of GST registration has become must. Learned counsel for the petitioner further submits that, let the Department again permit the petitioner to make good the default by paying whatever fine or penalty that is required to be paid, enabling the petitioner to restore his GST registration.

6. Per contra, the learned Special Government Pleader for State Tax contended that after obtaining the GST registration, the petitioner did not make good the requisite formalities and periodical updates that are required and also did not care to upload the bank account details.

7. It was also contended by the learned Special Government Pleader for State Tax that even after issuance of the show cause notice, the petitioner did not care to respond for the same, nor did he submit any explanation and in process the Department had no other option but to cancel the registration on account of continuous unattended default.

8. Having heard the contentions put forth on either side and on perusal of records, what is relevant to be considered is the fact that the petitioner got himself registered with GST Department only on 11.07.2023. The show cause notice for the default was one which was issued on 01.03.2024. Thus, from the aforesaid factual matrix itself it is evidently clear that the petitioner did not run the business effectively or smoothly for a long period of time with the so-called default of not providing bank account details. What is also necessary to appreciate is the contention of the petitioner that, in between the petitioner underwent great financial loss because of loss suffered in business and on account of which he could not effectively run the business. This all the more added to the default of not making available the bank account details and later on the order of cancellation of GST registration was issued on 26.08.2024.

9. Learned counsel for the petitioner in the course of his arguments had agreed for making good whatever conditions that the Court may impose while directing the Department to restore the GST registration of the petitioner.

10. What we need to understand is that the only deficiency on the part of the petitioner seems to be not uploading the bank account details, which may not be so grave a deficiency entailing cancellation of GST registration. Another aspect which needs to be looked into is that the show cause notice issued was as vague as it can be, since it did not disclose the specific shortcomings or default on the part of the petitioner and neither was it calling upon the petitioner to make good the deficiency within any stipulated period of time. There is also no proof of the Department having effectively served the show cause notice and impugned order of cancellation of registration upon the petitioner, except for the contention of having sent it by postal receipt.

11. Another aspect which needs to be appreciated is the fact that cancelling registration of the petitioner by itself is not going to help the State in any manner. More pragmatic approach would be if the GST registration of the petitioner is restored subject to the petitioner fulfilling all the requisite conditions which includes paying of any late fees, fine, penalty or damages for the default that the petitioner had committed. On the other hand, if the petitioner is permitted to get his GST registration restored and is made to pay the fine, penalty and other dues payable to the Department, the same will also generate some revenue to the Department and will also simultaneously restore the business activities of the petitioner. Under both the situations, the Department is going to benefit as they would be getting certain charges by way of fees, fine or penalty. At the same time, the petitioner also would be able to discharge business activities and earn some profit. The more the petitioner earns profit, the more the Department also would be getting benefits out of the same. It is also not going to benefit either of the parties if the petitioner is not permitted to get his GST registration opened. Whereas, if he resumes his business and revives his GST registration all the stakeholders would be equally benefited, including the petitioner and the Department.

12. Thus, in the larger interests of the economics and also economy of the country the impugned order of GST registration dated 26.08.2024, passed by respondent No.1 is set aside. The petitioner is directed to move appropriate fresh petition before respondent No.1 for reviving the GST registration which already stands cancelled. It is made clear that the revival of GST registration of the petitioner is subject to the petitioner depositing the late fees, fine or penalty.

13. With the aforesaid observations and directions, the instant writ petition stands allowed.

14. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.