M/S Pristine Steels vs. The Superintendent Of Central Tax
Original PDF →Facts
The petitioner's GST registration was cancelled based on a Show Cause Notice alleging 'Bill Trading' under CGST Rules 21(b) and 21(e). The cancellation order erroneously stated that no reply was filed, despite the petitioner having submitted a response arguing the SCN lacked specific details.
Held
The High Court quashed the Show Cause Notice and the subsequent cancellation order, finding a complete lack of application of mind by the respondent and non-compliance with Rule 22 of the CGST Rules. The Court held that the SCN lacked specific details, preventing the petitioner from effectively responding, but allowed fresh proceedings.
Key Issues
Whether the cancellation of GST registration was valid when the cancellation order failed to consider the petitioner's reply and the Show Cause Notice lacked specific details as required by Rule 22 of the CGST Rules.
Sections Cited
Rule 21(b), Rule 21(e), Rule 22
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER FOR CANCELLATION OF REGISTRATION DATED 18.05.2026 ISSUED IN FORM GST REG-19 IN REFERENCE NO. ZA290526075503A BY THE RESPONDENT CANCELLING THE REGISTRATION OF THE PETITIONER AS PER ANNEXURE-A, BY ISSUING A WRIT OF CERTIORARI OR ANY OTHER WRIT IN THE NATURE OF A WRIT OF CERTIORARI AND DIRECTING THE RESPONDENT TO PERMIT THE PETITIONER TO CARRY ON ITS ACTIVITIES BY IMMEDIATELY RESTORING GST REGISTRATION AND FURTHER ENABLE THE PETITIONER TO FILE ITS GST RETURNS IN ACCORDANCE WITH THE LAW, BY ISSUING A WRIT OF MANDAMUS.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
ORAL ORDER
The petitioner is aggrieved by the Order of Cancellation dated 18.05.2026 [Annexure-A]. This Order cancels the petitioner’s Central Goods and Services Tax Registration. This Order is after issuance HC-KAR NC: 2026:KHC:29250 of the Show Cause Notice dated 07.04.2026. The respondent has issued the Show Cause Notice alleging Bill Trading referring to Rules 21[b] and 21[e] of the Central Goods and Services Tax Rules, 2017 [for short, ‘the CGST Rules’] while suspending the registration.
The petitioner has caused Reply dated 28.04.2026 stating, amongst others, that in the absence of the details of those suppliers against whom there could be allegations of Bill Trading, the petitioner, within its limitation, has ascertained the validity and genuineness of all its suppliers, and in the absence of other details, the petitioner cannot be found fault resulting in the cancellation of registration. The respondent has cancelled the registration vide the impugned order observing that no Reply is filed.
Ms. Veena J Kamath, the learned counsel for the petitioner, relies upon this obvious error to assert that no proceedings could have been continued with the Show Cause Notice that lacked in material HC-KAR NC: 2026:KHC:29250 details. Sri Jeevan J Neeralgi, the learned counsel for the respondent, is heard. This Court must observe that there is complete lack of application of mind in directing cancellation of registration because though there is response, the order is in the premise that there is no ‘Reply’.
Further, this Court is also persuaded to interfere with the Show Cause Notice because of failure to comply with the requirement of Rule 22 of the CGST Rules which requires issuance of Notice when the Officer concerned has ‘reasons to believe’ that the registration is liable to be cancelled. This Court opines that the Show Cause Notice must be specific on the facts which has led the Officer to believe that the registration must be cancelled, and in the absence of those details, the issuance of Show Cause Notice would only be a formality as the registered person will not be in a position to show cause. This Court must
therefore intervene and also observe that this HC-KAR NC: 2026:KHC:29250 intervention cannot foreclose proceedings that could be in accordance with law. Hence, the following. ORDER
The petition is allowed quashing the Show Cause Notice dated 07.04.2026 [Annexure-C] and the subsequent Order of cancellation of Registration dated 18.05.2026 [Annexure-A] observing that the respondent would be at liberty to initiate fresh proceedings based on reasons recorded as contemplated under Rule 22 of the CGST Rules, 2017. (B M SHYAM PRASAD) JUDGE
AN/-
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.