GST cancellation based on a stale, year-old show cause notice is legally unsustainable.

By | July 6, 2026
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GST cancellation based on a stale, year-old show cause notice is legally unsustainable.

Issue

Whether the tax authority can validly cancel a taxpayer’s GST registration based on a stale Show Cause Notice (SCN) after a long period of total inaction spanning two financial years.

Facts

  • The petitioner is a partnership firm registered under the CGST/Assam SGST Act.

  • On August 13, 2024, the tax authority issued a Show Cause Notice (SCN) via the online portal due to the non-filing of returns.

  • Following the issuance of the SCN, the authority took no further action or steps for a prolonged period.

  • On February 5, 2026, the authority abruptly cancelled the petitioner’s registration by relying on the stale August 2024 notice.

  • The petitioner discovered the cancellation only when attempting to file returns and subsequently challenged the order due to a lack of a fresh or timely hearing.

Decision

  • The Court noted that the initial SCN was followed by absolute inaction, making the cancellation order passed much later entirely abrupt.

  • The notice had become redundant and stale due to the long interregnum (intervening gap) spanning across the 2024-25 and 2025-26 financial years.

  • The authority failed to consider the intervening return-filing obligations that accrued during this period of inaction.

  • The cancellation order was held to be unfair, unjust, and not in conformity with statutory requirements.

  • The impugned cancellation order dated February 5, 2026, was set aside and quashed, though the Proper Officer remains free to initiate fresh action strictly in accordance with the law.

Key Takeaways

  • Doctrine of Stale Notice: A Show Cause Notice cannot be kept pending indefinitely; an unreasonable delay without action renders the notice redundant.

  • Natural Justice & Fairness: Abruptly acting on old notices without giving a fresh opportunity or hearing violates principles of administrative fairness.

  • Compliance Continues: Setting aside a procedural cancellation does not waive the taxpayer’s statutory obligation to remain compliant and file regular returns.

HIGH COURT OF GAUHATI
S R Enterprise
v.
Union of India
DEVASHIS BARUAH, J.
WP(C) No. 3345 of 2026
JUNE  24, 2026
Ms. M. Das, Adv. for the Petitioner. Ms. U. Baruah, CGC and K Jain, Adv. for the Respondent.
ORDER
1. Heard Ms. M Das, the learned counsel appearing on behalf of the petitioner. Also heard Ms. U Barua, the learned CGC, who appears on behalf of the respondent No.1 and Mr. K Jain, the learned counsel who appears on behalf of the respondent Nos.2 and 3.
2. The petitioner herein has approached this Court challenging the order of cancellation of the registration dated 05.02.2026. It is the case of the petitioner that there was no show cause notice issued to the petitioner against the said cancellation. In fact, the show cause notice which has been referred to in the order of cancellation of the registration dated 05.02.2026 is almost 18 months old.
3. The materials on record show that the petitioner herein is a partnership firm and was granted registration bearing Registration No.18ADYFS0183K1ZA. On the ground that the petitioner did not submit the returns in terms with Section 39 of the Central Goods and Service Tax Act 2017 (for short, ‘the Act of 2017’), a show cause notice was issued on 13.08.2024 in the portal.
4. Be that as it may, the respondent No.3, thereupon, did not take any action. Recently, the petitioner could come to learn upon taking steps for filing of the returns that the petitioner’s registration was cancelled on 05.02.2026 on the basis of a show cause notice dated 13.08.2024. It is under such circumstances, the petitioner is before this Court.
5. The learned counsel appearing on behalf of the petitioner submitted that Section 29 of the Act of 2017, though permits the Proper Officer to cancel the registration, but before doing so, the Proper Officer has to give the petitioner an opportunity of being heard. The learned counsel submitted that even assuming for argument’s sake that the notice dated 13.08.2024 can be said to be a notice properly issued, then also not taking action on the same for a period of more than 18(eighteen) months, and all of a sudden taking action on 05.02.2026, cannot be said to be an action based upon the said show cause notice.
6. This Court has also heard Mr. K Jain, the learned counsel for the respondent Nos.2 and 3 and has given an anxious consideration to the submissions so made by the learned counsels appearing on behalf of the parties as well as the materials on record.
7. From a perusal of the materials on record, it is apparent that the show cause notice was issued on 13.08.2024. Thereupon, the Proper Officer did not take any steps. The records further reveal that all of a sudden, on 05.02.2026, the registration was cancelled. The cancellation of the registration in such a manner cannot be said to be in compliance to the proviso to Section 29(2) of the Act of 2017, inasmuch as, the said notice which was issued on 13.08.2024 has become redundant in view of no action being taken. Further to that, for the period from 13.08.2024 till 05.02.2026, there has been 2(two) financial years, and there were various other intervening events, which required filing of returns. These aspects were not taken into consideration by the respondent No.3 and as such, it is the opinion of this Court that the impugned order of cancellation dated 05.02.2026 is not in conformity with the proviso to Section 29(2) of the Act of 2017, but also appears to be unfair and unjust.
8. Accordingly, the impugned order of cancellation of the registration dated 05.02.2026 is set aside and quashed.
9. Before parting with the records, this Court, however, observes that the setting aside of the order for cancellation of the registration dated 05.02.2026 shall not bar the Proper Officer to initiate action against the petitioner in the circumstance, materials are available for initiating action under Section 29, if so advised.
10. It is further observed that interference with the order of cancellation dated 05.02.2026 shall not be construed that this Court had waived requirement of compliance by the Petitioner in terms of the Act of 2017.
11. With the above, the writ petition stands disposed of.