High Court Quashes GST Registration Cancellation for Non-Speaking Order

ALLAHABAD HIGH COURT

WRIT TAX NO. 5924 OF 2025

M/S ANIL ART AND CRAFT

VERSUS

STATE OF UTTAR PRADESH & ANR.

HEADNOTE-

GST Registration – Cancellation – Requirement of Reasoned Order -Cancellation of GST registration cannot be sustained when the authority merely records that the reply is “not satisfactory” without assigning reasons. A non-speaking order violates fundamental principles of natural justice. The High Court quashed the cancellation order for being unreasoned, stressed the gravity of registration cancellation, and directed systemic corrective measures to ensure procedural fairness in future.

BRIEF FACTS OF THE CASE-

The petitioner challenged the order dated 15.10.2025 by the Assistant Commissioner, State Tax, Bhadohi, cancelling its GST registration. A show cause notice had been issued earlier on 08.10.2025 alleging violation of Section 16 of the GST Act by availing bogus ITC. The petitioner submitted a detailed reply on 15.10.2025, explaining that a DGGI survey was pending and that they were cooperating, requesting that cancellation proceedings be deferred. Despite this, the authority cancelled the registration stating only that the reply was “not satisfactory,” without giving reasons. The High Court found the order to be unreasoned and procedurally defective, set it aside, and directed the Commissioner to ensure proper, reasoned orders in future. 

JUDGMENT-

6. It is a self apparent truth that respondent no.2 has acted carelessly in complete defiance of the minimum requirement of procedural law, inasmuch as, absolutely no reason has been assigned to reject the explanation furnished by the petitioner. By stating that the reply is “not satisfactory”, the said respondent-authority has only indicated the conclusion but has made no disclosure of the reason, to reach that conclusion. 

7. It is a sine qua non and absolutely fundamental to procedural law as may be plain to a law student that such a requirement is non-negotiable. Therefore, we are at loss to understand what would have compelled respondent no.2 to pass such a non-speaking order.

8. We are equally mindful that the order of cancellation of registration causes deep adverse impact on the conduct of business of any registered individual. Neither the petitioner shall remain entitled to issue Tax Invoices nor may be entitled to avail tax ITC or to pass on ITC. Under the GST regime, it announces the economic death of the business entity. 

10. While the court appreciates the fairness on part of learned standing counsel, we cannot leave the matter at that. Accordingly, the impugned order is set-aside. With respect to the proceeding that may be continued or conducted pursuant to the show cause notice dated 08.10.2025 we provide as below:-

1. Let this order be communicated to the Commissioner, Commercial Tax, Uttar Pradesh within one week along with a copy this petition, by the learned standing counsel.
2. The Commissioner, Commercial Tax, Uttar Pradesh may first issue appropriate order to transfer the cancellation proceeding to an officer well informed in law, who may conduct and conclude the proceeding strictly in accordance with law.
3. The Commissioner, Commercial Tax, Uttar Pradesh may take notice of this occurrence and issue appropriate administrative instructions to all the officers/authorities under the GST to ensure that such action is not repeated in future by other proper officers/authority (dealing with matters on cancellation of registration ), except at risk of appropriate administrative action.
4. The above instructions (to be issued by the Commissioner) would necessarily provide for penal consequences that may be followed if such orders are passed by authorities, in future.