GST Registration Cannot Be Cancelled on Voluntary Application without Issuing Notice u/r 22(1): Allahabad HC [Read Order]

The Allahabad High Court has ruled that the Goods and Services Tax ( GST ) registration of a dealer cannot be cancelled merely on the basis of a voluntary application filed by counsel without following the mandatory procedure under Rule 22(1) of the CGST Rules, 2017.

The Court ruled that before accepting any application for voluntary cancellation under Form REG-16, the competent authority must issue the notice in Form GST REG-17, otherwise, the cancellation order is not legally enforceable.

The petitioner, Neelam Tripathi, challenged the order dated July 11, 2023, passed by the proper officer cancelling her GST registration and the subsequent appellate order dated February 11, 2024, approving the cancellation.

It was contended that the petitioner’s earlier counsel had, without her consent, filed a voluntary surrender application in Form REG-16. The authorities, without issuing any notice under Rule 22(1) of the CGST Rules, accepted the application and cancelled her registration.

When the petitioner later engaged another counsel, she came to know of the cancellation and filed an appeal, which was dismissed without proper consideration of the procedural lapse.

The petitioner argued that the State authorities had failed to comply with the mandatory requirement of issuing a show cause notice in Form GST REG-17 under Rule 22(1), which mandates that before cancellation of registration, a notice must be issued to the taxpayer to show cause as to why their registration should not be cancelled.

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The State contended that since an application for voluntary cancellation had been submitted, the authority was justified in accepting it, and no violation of procedure had occurred. However, the Court disagreed with this contention.

Justice Piyush Agrawal observed that while it was undisputed that the application in Form REG-16 was filed, the issuance of notice under Form GST REG-17 was mandatory before passing any cancellation order.

As the department had itself admitted that no such notice had been issued, the Court held that the impugned orders were contrary to the statutory procedure prescribed under Rule 22(1) and therefore could not be sustained.

The Court quashed both the orders, the original cancellation order dated July 11, 2023, and the appellate order dated February 11, 2024 and remitted the matter back to the proper officer to initiate fresh proceedings.

The officer was directed to issue a proper notice within fifteen days of receiving the certified copy of the order, allow the petitioner twenty-one days to respond, and after passing a reasoned and speaking order after granting an opportunity of personal hearing within one month.

The petition was disposed of accordingly.

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