Rajat Banasal vs. Commissioner Of Central Goods And Services Tax(CGST), Shimla

Held

The Court held that while the respondent had presented sufficient material to justify cancellation, the Show Cause Notice and the final order lacked specific reasons for the retrospective cancellation. The Court acknowledged the petitioner's restriction of his claim to prayer (b) only, which sought cancellation from the date of the order (17.01.2025). Consequently, the Court set aside the retrospective operation of the impugned order dated 17.01.2025. The matter was remitted to the Proper Officer to decide afresh the question of whether cancellation should be effective from 15.03.2022 or 17.01.2025. The Court directed the petitioner to file a detailed reply to the Show Cause Notice by 25.07.2026, after which the Proper Officer would grant a hearing and pass a reasoned order within six weeks, by 05.09.2026. The Court explicitly stated it had not expressed any opinion on the merits of the allegations regarding the non-existence of business from the declared principal place of business.

Facts

The petitioner, Rajat Bansal, operating as M/s Shiv Trading Co., had his GST registration cancelled retrospectively from 15.03.2022 by an order dated 17.01.2025, following a Show Cause Notice dated 16.10.2024. The petitioner challenged these actions, arguing they lacked reasons and were arbitrary, causing business losses. The respondent contended that the petition was not maintainable due to the availability of an alternative remedy under Rule 23 of the CGST Rules and Section 107 of the CGST Act. The respondent also presented evidence from an inspection on 16.10.2024, indicating the petitioner's firm was not found at the principal place of business, with another entity operating there, and neighbours confirming no such business existed. The petitioner, during the hearing, restricted his claim to seeking cancellation of registration from the date of the order (17.01.2025) rather than retrospectively.

Key Issues

1. Whether the Show Cause Notice dated 16.10.2024 and the subsequent Order of Cancellation of Registration dated 17.01.2025 are liable to be quashed and set aside for being bereft of reasons, as argued by the petitioner, violating principles of natural justice and established legal precedents. The petitioner contended that the lack of specific reasons in the notice and order made them arbitrary and prejudiced his business operations. 2. Whether the writ petition is maintainable before this Court, given the availability of an alternative statutory remedy under Rule 23 of the CGST Rules and Section 107 of the CGST Act, as argued by the respondent. The respondent asserted that the petitioner failed to avail the efficacious alternative remedy, rendering the petition premature. 3. Whether the cancellation of GST registration can be done retrospectively from the date of registration (15.03.2022) or from the date of the cancellation order (17.01.2025), considering the petitioner's submission that he was running his business from the same premises and the respondent's findings from the physical verification.