M/S. Paxal Trading Impex vs. Superintendent Of Central Tax
Original PDF →Facts
The petitioner's GST registration was suspended and subsequently cancelled by the respondent. The cancellation order was based on grounds (e-way bills showing interstate movement and no operations in Karnataka) different from those stated in the initial show cause notice (not conducting business from declared place, fraud).
Held
The High Court quashed the cancellation order, finding a lack of opportunity for the petitioner to explain the e-way bills which formed the basis of the cancellation. It directed the respondent to provide copies of the e-way bills, grant a fresh opportunity of hearing, and allow the petitioner to file a response to the original show cause notice.
Key Issues
Whether a GST registration cancellation order is valid if it is based on grounds not mentioned in the show cause notice and without providing the registrant an opportunity to respond to the new grounds.
Sections Cited
Section 29(2)(E), Rule 21(A)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER
The petitioner is aggrieved by the decision of the respondent to cancel the GST registration. The decision to cancel is as per Annexure -B and is dated 04.05.2026. The decision to cancel the registration is after the Show-Cause Notice dated 09.04.2026. Sri.Bharath Kumar V., the learned counsel for the petitioner, and Sri Jeevan J Neeralgi, the learned counsel for the respondent, are heard for the disposal of the petition. HC-KAR NC: 2026:KHC:29826
Sri Bharath Kumar V submits that this Court must intervene because the Show Cause Notice is issued on grounds such as the petitioner does not conduct business from the Declared Place of Business and it has played fraud and indulged in willful misstatement of facts in getting the registration but the registration is cancelled because certain e-way bills show that the inward and outward supplies are from Gujarat to Maharashtra and no operations are undertaken in the state of Karnataka and that neither the authorized signatory nor the office staff are found at the said place of business.
Sri Bharath Kumar V canvasses that this is despite the petitioner filing a detailed response showing the location, furnishing a copy of the lease deed, photograph of the principal place of residence, the electricity bill to show that the petitioner functions out of the registered address. The learned counsel also canvasses that the petitioner was issued HC-KAR NC: 2026:KHC:29826 with a registration on 21.02.2026 and the decision to cancel is even before the first returns are filed.
Sri Jeevan J Neeralgi cannot dispute that the Show Cause Notice is on one ground and the decision to cancel the registration is on another and the petitioner has not been extended an opportunity to explain the relevance of the e-way bills that are mentioned in the impugned order. The lack of opportunity is obvious, and therefore, this Court must intervene to set aside the order of cancellation to restore the proceedings observing that the suspension would also be in abeyance subject to final orders on cancellation. In the light of afore the following. ORDER
The petition is allowed in part and the impugned order dated 04.05.2026 [Annexure-B] is quashed with liberty to the petitioner to file response once again to the HC-KAR NC: 2026:KHC:29826 Show Cause Notice dated 09.04.2026 on 13.07.2026 and the respondent shall extend an opportunity of hearing and conclude the proceedings in the light of the cause shown against cancellation. It is needless to observe that the second respondent shall furnish copies of the e- way bills that form the basis for the cancellation of the registration. (B M SHYAM PRASAD) JUDGE
NV List No.: 3 Sl No.: 21
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.