Retrospective cancellation of GST registration and suspension during enquiry under Section 29(2) are legally valid.

By | July 24, 2026
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Retrospective cancellation of GST registration and suspension during enquiry under Section 29(2) are legally valid.

Issue

Whether a Show Cause Notice proposing retrospective cancellation of GST registration under Section 29(2) and suspending registration during pending enquiry can be challenged via writ petition prior to submitting a reply.

Facts

  • Initiation of SCN: On June 10, 2026, the Proper Officer issued a Show Cause Notice (SCN) proposing cancellation of GST registration due to alleged fraud, misstatement, and suppression of business address and particulars.

  • Opportunity to Respond: The SCN granted the petitioner an opportunity to file a reply and seek a personal hearing.

  • Suspension: The petitioner’s GST registration was suspended during the pendency of the cancellation proceedings.

  • Writ Challenge: Without filing a reply to the SCN, the petitioner approached the High Court challenging the SCN, the suspension, and the constitutional/legal validity of retrospective cancellation under Section 29(2) and Rule 21(a).

Decision

  • Writ Premature: The writ petition was held to be premature since proceedings were ongoing under the statutory framework and the petitioner had not yet submitted a reply to the SCN.

  • Retrospective Cancellation Valid: Section 29(2) explicitly empowers the Proper Officer to cancel GST registration from any date, including a retrospective date, making retrospective cancellation legally permissible.

  • Suspension Power Upheld: The Proper Officer possesses statutory authority to suspend GST registration during the pendency of cancellation proceedings for such period and in such manner as prescribed [Para 6].

Key Takeaways

  • Scope of Retrospective Cancellation: Section 29(2) of the CGST/MGST Act gives clear statutory mandate to tax authorities to cancel GST registrations retrospectively in cases involving fraud, misstatement, or suppression.

  • Exhaustion of Statutory Remedies: A writ court will generally not entertain challenges to a Show Cause Notice before the taxpayer files a response and allows the administrative enquiry to reach a conclusion.

  • Validity of Suspension: Suspension of registration during cancellation proceedings is a valid interim measure designed to prevent further tax evasion while investigations are underway.

HIGH COURT OF BOMBAY
Reberoshine International (OPC) (P.) Ltd.
v.
Commissioner of State Tax
Suman Shyam and Advait M. Sethna, JJ.
WRIT PETITION (L) NO. 20652 OF 2026
JUNE  30, 2026
Anjesh Pandit and Ms. Shifa Khan for the Petitioner. Ms. Jyoti Chavan, Addl. GP, Amar Mishra, AGP
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 10th 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 10th 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.