Retrospective Cancellation and Suspension of GST Registration Under Section 29(2) Upheld Where SCN Contains Fraud Allegations

By | September 17, 2026
0 Comment
Retrospective Cancellation and Suspension of GST Registration Under Section 29(2) Upheld Where SCN Contains Fraud Allegations
Issue
Whether a Show Cause Notice alleging address suppression to avoid tax and proposing retrospective cancellation and suspension of GST registration under Section 29(2) read with Rule 21A can be challenged directly via a writ petition without submitting a reply to the notice.
Facts
  • The petitioner, a registered taxpayer under GST, was issued a Show Cause Notice (SCN) by the State Tax Officer proposing the cancellation of its GST registration.
  • The allegation in the SCN was that the petitioner suppressed its address and other particulars to avoid CGST liability.
  • Pending cancellation proceedings, the tax officer suspended the petitioner’s GST registration retrospectively.
  • The SCN explicitly offered the petitioner an opportunity to file a reply and attend a personal hearing.
  • The petitioner chose not to file any reply to the SCN and instead invoked writ jurisdiction to challenge the SCN, Section 29(2), and Rule 21A.
Decision
  • Statutory Power for Retrospective Action: Section 29(2) empowers the tax authority to cancel GST registration from any date, including retrospectively, when specified grounds (such as fraud or suppression) are alleged.
  • Legality of Suspension: The second proviso to Section 29(2) read with Rule 21A authorizes the suspension of registration during the pendency of cancellation proceedings for such period and in such manner as prescribed.
  • Exhaustion of Remedies: The High Court declined to entertain the constitutional/statutory challenge to Section 29(2) and Rule 21A, holding that all factual and legal defenses raised in the writ petition could properly be urged in a reply before the officer.
  • Dismissal: The writ petition was dismissed as devoid of merit, holding in favor of the Revenue.
Key Takeaways
  • Retrospective Cancellation Permissible: Tax authorities hold explicit statutory authority under Section 29(2) to cancel a GST registration retrospectively where fraud or deliberate suppression of address/particulars is alleged.
  • Validity of Interim Suspension: Pending final determination on registration cancellation, interim suspension under Rule 21A is legally valid.
  • Writ Court Reluctance at SCN Stage: Courts will generally not entertain a writ petition against an SCN where the statute provides a full opportunity to file a reply and appear for a personal hearing.
HIGH COURT OF BOMBAY
Ricon Enterprises
v.
Commissioner of State Tax
Suman Shyam and Advait M. Sethna, JJ.
WRIT PETITION (L) NO. 20583 OF 2026
JUNE  30, 2026
Anjesh Pandit and Ms. Shifa Khan for the Petitioner. Ms. Jyoti Chavan, Addl. GP and Amar Mishra, AGP for the Respondent.
ORDER
1. Heard Mr. Anjesh Pandit, learned counsel appearing for the Petitioner. Also heard Ms. Jyoti Chavan, learned Addl. GP appearing for the State.
2. In this Writ Petition, the Show Cause Notice dated 9th June, 2026 issued by the State Tax Officer has been assailed, primarily on the ground that the GST registration of the Petitioner has been suspended with retrospective effect.
3. The learned counsel for the Petitioner has advanced arguments in his attempt to convince this Court that even though cancellation of GST registration with retrospective effect may be permissible under Section 29(2) of the CGST Act, 2017 (Act of 2017), yet, suspending such cancellation with retrospective effect is impermissible in the eyes of law. As such, the Petitioner has assailed the show cause notice dated 9th June, 2026 as well as the provisions of Section 29(2) of CGST Act and Rule 21(a) of the GST Rules.
4. We find from a perusal of the show cause notice that department has alleged fraud against the Petitioner. According to the Department, the Petitioner has deliberately suppressed his address and other particulars pertaining to place of business so as to avoid CGST.
5. We have considered the submissions made at the Bar and have also gone through the material available in the Writ Petition.
6. Coming to the first issue raised by the Petitioner that the suspension of GST registration with retrospective effect is impermissible under law, we find that Section 29(2) of the Act of 2017 categorically permits cancelling of GST registration from any date which may include a retrospective date. Therefore, it is apparent that the cancellation of GST registration with retrospective effect is permissible under the law.
7. In so far as the second proviso to Section 29(2) of the Act of 2017 is concerned, here also, the law provides that during pendency of the proceedings relating to cancellation of registration, the Officer has the power to suspend the registration, for such period and in such manner, as may be prescribed. The meaning of the expression “as may be prescribed” in our considered opinion would mean as may be prescribed under Section 29 of the Act of 2017. This we say so because Section 29 of the Act of 2017 not only deals with cancellation of registration but also with suspension of the same.
8. In so far the challenge to section 29(2) of the Act of 2017, is concerned, we do not find any good ground for this Court to entertain the aforesaid challenge at the instance of the Petitioner. Likewise, we do not find any valid ground to entertain challenge to Rule 21(a) of the GST Rules.
9. Although the learned counsel appearing for the Petitioner has submitted that similar Writ Petition assailing Section 29 of the Act of 2017 is pending before this Court, wherein interim order of protection is operating, yet, our attention has been drawn by the learned AGP to the order of dismissal of that petition. She has relied upon the order dated 16th November, 2022 passed in Writ Petition No.3643 of 2022 by means of which the said Writ Petition was dismissed to submit that no such Writ Petition is pending before this Court.
10. Be that as it may, we find from the impugned show cause notice that besides granting scope to file reply, the Petitioner was afforded opportunity of personal hearing. However, Petitioner has failed to file any reply to the show cause notice. The plea raised in the Writ Petition can very well be taken in the show cause reply.
11. For the reasons stated above, the Writ Petition is held to be devoid of any merit. The same is accordingly dismissed. The questions of law are kept open to be decided in an appropriate proceeding.