Cancellation order passed on grounds not specified in SCN

Cancellation order passed on grounds not specified in SCN is invalid and restored registration.

Issue

Whether a GST registration cancellation order based on non-furnishing of returns is legally sustainable when the preceding Show Cause Notice proposed cancellation solely on grounds of fraud, wilful misstatement, or suppression.

Facts

Registration Status: The petitioner was a registered taxable person under the CGST/Telangana GST Act.
Issuance of SCN: The Proper Officer issued a Show Cause Notice in Form GST REG-17 proposing cancellation of registration on allegations that it was obtained by fraud, wilful misstatement, or suppression of facts.
Cancellation Order: Subsequently, the Proper Officer passed an order in Form GST REG-19 cancelling the registration; however, the ground cited for cancellation was the failure to furnish returns.
Writ Challenge: The petitioner filed a writ petition challenging the cancellation order and seeking immediate restoration of its GST registration due to the contradiction between the SCN and the final order.

Decision

Violation of Natural Justice: The cancellation order was held to be severely vitiated as it rested on a ground entirely different from the one specified in the SCN.
Mandate of SCN: Issuing an SCN alleging fraud while ultimately cancelling registration for non-filing of returns breaches the fundamental requirement to inform the assessee of the precise charges along with supporting material.
Quashing & Restoration: The SCN, as well as the consequential cancellation order, were quashed, and the petitioner’s GST registration was ordered to be restored immediately [Paras 4, 6, and 7].

Key Takeaways

Strict Adherence to SCN Grounds: An adjudicating authority cannot pass an adverse order on grounds that were not explicitly communicated to the taxpayer in the Show Cause Notice.
Natural Justice & Due Process: A noticee must be given a fair opportunity to defend against specific charges; introducing new grounds in the final order violates principles of natural justice.
Procedural Flaw Invalidates Order: Arbitrary deviation from the grounds mentioned in Form GST REG-17 renders the resulting cancellation order in Form GST REG-19 illegal and liable to be set aside.

HIGH COURT OF TELANGANA

JK Technology

Deputy State Tax Officer

APARESH KUMAR SINGH, CJ.
and G.M. MOHIUDDIN, J.

WRIT PETITION No. 21690 of 2026

JULY 9, 2026

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

ORDER

1. Learned counsel Sri K.P. Amarnath Reddy appears for the petitioner.

Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for the respondents.

2. The impugned order of cancellation of Goods and Services Tax Registration of the petitioner, dated 22.01.2024 was passed on a ground alien to the show cause notice issued by respondent No.1 on 08.08.2023 in Form GST REG-17. For proper appreciation, the contents of the show cause notice and the order of cancellation are extracted hereunder:

“FORM GST REG-17

[See Rule 22(1)/sub-rule (2A) of rule 21A]

Reference No: ZA3608230199639

Date: 08.08.2023

To Registration Number (GSTIN/Unique ID): 36AQBPA9817C1Z7 Mohd Ahmed Ali

PLOT NO. 70, GROUND FLOOR, JALPALLY, BALAPUR MANDAL, Hyderabad, Ranga Reddy, Telangana, 500005

Show Cause Notice for Cancellation of Registration

Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:

1. Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts.

You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.

You are hereby directed to appear before the undersigned authority on 15/08/2023 at 11:30.

If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.

Please note that your registration stands suspended with effect from 08.08.2023.

Kindly refer the supportive document attached for case specific details – Not Applicable.

Place: Telangana

Date: 08/08/2023

NARSING RAO PALLYE

Deputy State Tax Officer,

CHARMINAR: Charminar: Telangana“

“FORM GST REG-19

[See rule 22(3)]

Reference No: ZA360124054955F

Date: 22.01.2024

Mohd Ahmed Ali

PLOT NO.70, GROUND FLOOR, JALPALLY, BALAPUR MANDAL, Hyderabad, Ranga Reddy, Telangana, 500005

GSTIN/UIN: 36AQBPA9817C1Z7

Application Reference Number (ARN): AA360823014060R Date:

Order for Cancellation of Registration

This has reference to show cause notice issued dated 08/08/2023.

Whereas no reply to the show cause notice has been submitted;

and whereas, the undersigned based on record available with this office is of the opinion that your registration is liable to be cancelled for following reason(s):

Section 29(2)(c) – Person, other than paying tax u/s 10, failed to furnish returns for prescribed periods

The tax payer have not filed returns from 01 JAN 2023 to till date hence GSTN is liable to cancellation

The effective date of cancellation of your registration is 01/01/2023.

2. Kindly refer to the supportive document(s) attached for case specific details. – Not applicable

3. It may be noted that a registered person furnishing return under subsection (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order.

4. You are required to furnish all your pending returns.

5. It may be noted that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

Place: Telangana

Date: 22.01.2024

Sudha Rani Dhameera

Deputy State Tax Officer

CHARMINAR”

3. Learned counsel for the petitioner has taken other grounds also which have been contested by the learned Special Government Pleader for State Tax.

4. However, upon hearing learned counsel for the parties, we are inclined to allow the writ petition by quashing the order of cancellation of registration for the sole reason that it is based upon a ground upon which the petitioner was never put to notice. The cancellation has been done for allegedly non-furnishing of returns for the prescribed periods in teeth of Section 29(2)(c) of the Central Goods and Services Tax Act, 2017 (for short, “the Act”). The show cause notice alleged obtaining of registration by fraud, wilful misstatement or suppression of facts in teeth of Section 29(2)(e) of the Act.

5. Learned counsel for the petitioner submits that a consequential direction also be issued to immediately restore the registration of the petitioner.

6. In such circumstances, both the impugned order of cancellation of registration and the show cause notice are quashed and the Goods and Services Tax registration of the petitioner is restored. However, liberty is granted to the respondents to issue fresh show cause notice, if any grounds exist for proposed cancellation of GST registration of the petitioner. Needless to say that the show cause notice should contain specific grounds with supporting documents so that the petitioner can submit a reply. Based thereupon, the proper officer can take a decision in accordance with law in a time bound manner.

7. The writ petition is accordingly allowed. There shall be no order as to costs.