S R Enterprise vs. The Union Of INDIA And 2 Ors

WP(C)/3345/2026HC GauhatiGSTCNR GAHC01012777202623 June 2026Bench: HONOURABLE MR. JUSTICE DEVASHIS BARUAH4 pages

AI SummaryRemanded

Facts

The petitioner, S R Enterprise, a partnership firm, challenged the cancellation of its GST registration by the Superintendent (Respondent No. 3) on 05.02.2026. The petitioner contended that no proper show cause notice was issued, and the notice referenced in the cancellation order, dated 13.08.2024, was issued almost 18 months prior to the cancellation. The petitioner argued that this delay rendered the notice stale and that the cancellation was therefore invalid. The respondents, represented by the Union of India and the Principal Commissioner of Central Goods and Services Tax, appeared before the court.

Held

The Court held that the impugned order of cancellation of registration dated 05.02.2026 was not in compliance with the proviso to Section 29(2) of the Act of 2017. The Court reasoned that the show cause notice issued on 13.08.2024 had become redundant due to the inaction of the Proper Officer for over 18 months. The Court noted that during this period, two financial years had passed, and various intervening events requiring the filing of returns occurred, which were not considered by the respondent. This delay and lack of consideration rendered the cancellation order unfair and unjust. Consequently, the Court set aside and quashed the cancellation order. However, the Court clarified that this decision would not prevent the Proper Officer from initiating fresh action under Section 29 if circumstances and materials warranted it, nor did it waive the petitioner's compliance requirements under the Act.

Key Issues

1. Whether the cancellation of GST registration dated 05.02.2026, based on a show cause notice dated 13.08.2024, is valid in light of the significant delay in taking action, and if this action complies with the proviso to Section 29(2) of the Central Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner argued that Section 29 of the Act requires an opportunity of being heard before cancellation. They contended that even if the 13.08.2024 notice was considered valid, the inaction for over 18 months made the subsequent cancellation on 05.02.2026 arbitrary and not based on the said show cause notice. The petitioner emphasized that the delay meant the notice had become redundant. Revenue's arguments: The judgment records that the learned counsel for the respondents appeared and made submissions, but their specific arguments are not detailed.

Sections Cited

Section 39, Section 29(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

Page No.# 1/4 GAHC010127772026 2026:GAU-AS:9228 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/3345/2026 S R ENTERPRISE A PARTNERSHIP FIRM HAVING ITS REGISTERED OFFICE AT JAPORIGOG, GHY, KAMRUP M, ASSAM, 781005, REPRESENTED BY MR SATYAJIT SARMA AND MR RINKU SARMA VERSUS THE UNION OF INDIA AND 2 ORS REPRESENTED BY THE SECRETARY TO THE GOVT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, ROOM NO 66A, NORTH BLOCK, NEW DELHI 110001 2:THE PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX GST BHAWAN KEDAR ROAD GHY 781001 ASSAM 3:THE SUPERINTENDENT OFFICE OF THE PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX GST BHAWAN KEDAR ROAD GHY 781001 ASSA Advocate for the petitioner(s): Ms. M Das Page No.# 2/4 Advocate for the respondent(s): Ms. U Barua, CGC Mr. K Jain, For respondent Nos.2 and 3 B E F O R E HON’BLE MR. JUSTICE DEVASHIS BARUAH

ORDER 24.06.2026

Heard Ms. M Das, the learned counsel appearing on behalf of the petitioner. Also heard Ms. U Barua, the learned CGC, who appears on behalf of the respondent No.1 and Mr. K Jain, the learned counsel who appears on behalf of the respondent Nos.2 and 3. 2. The petitioner herein has approached this Court challenging the order of cancellation of the registration dated 05.02.2026. It is the case of the petitioner that there was no show cause notice issued to the petitioner against the said cancellation. In fact, the show cause notice which has been referred to in the order of cancellation of the registration dated 05.02.2026 is almost 18 months old.

The materials on record show that the petitioner herein is a partnership firm and was granted registration bearing Registration No.18ADYFS0183K1ZA. On the ground that the petitioner did not submit the returns in terms with Section 39 of the Central Goods and Service Tax Act 2017 (for short, ‘the Act of 2017’), a show cause notice was issued on 13.08.2024 in the portal.

Be that as it may, the respondent No.3, thereupon, did not take any action. Recently, the petitioner could come to learn upon taking steps for filing of the Page No.# 3/4 returns that the petitioner’s registration was cancelled on 05.02.2026 on the basis of a show cause notice dated 13.08.2024. It is under such circumstances, the petitioner is before this Court.

The learned counsel appearing on behalf of the petitioner submitted that Section 29 of the Act of 2017, though permits the Proper Officer to cancel the registration, but before doing so, the Proper Officer has to give the petitioner an opportunity of being heard. The learned counsel submitted that even assuming for argument's sake that the notice dated 13.08.2024 can be said to be a notice properly issued, then also not taking action on the same for a period of more than 18(eighteen) months, and all of a sudden taking action on 05.02.2026, cannot be said to be an action based upon the said show cause notice.

This Court has also heard Mr. K Jain, the learned counsel for the respondent Nos.2 and 3 and has given an anxious consideration to the submissions so made by the learned counsels appearing on behalf of the parties as well as the materials on record.

From a perusal of the materials on record, it is apparent that the show cause notice was issued on 13.08.2024. Thereupon, the Proper Officer did not take any steps. The records further reveal that all of a sudden, on 05.02.2026, the registration was cancelled. The cancellation of the registration in such a manner cannot be said to be in compliance to the proviso to Section 29(2) of the Act of 2017, inasmuch as, the said notice which was issued on 13.08.2024 has become redundant in view of no action being taken. Further to that, for the period from 13.08.2024 till 05.02.2026, there has been 2(two) financial years, and there were various other intervening events, which required filing of returns. These aspects were not taken into consideration by the respondent No.3 and as such, it is the opinion of this Court that the impugned order of Page No.# 4/4 cancellation dated 05.02.2026 is not in conformity with the proviso to Section 29(2) of the Act of 2017, but also appears to be unfair and unjust.

Accordingly, the impugned order of cancellation of the registration dated 05.02.2026 is set aside and quashed.

Before parting with the records, this Court, however, observes that the setting aside of the order for cancellation of the registration dated 05.02.2026 shall not bar the Proper Officer to initiate action against the petitioner in the circumstance, materials are available for initiating action under Section 29, if so advised.

10.

It is further observed that interference with the order of cancellation dated 05.02.2026 shall not be construed that this Court had waived requirement of compliance by the Petitioner in terms of the Act of 2017. 11. With the above, the writ petition stands disposed of.

JUDGE Comparing Assistant

Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.