Gauhati HC: The writ petition filed under Article 226 of the Constitution, against the order passed by the Proper Officer, which cancelled the GST Registration of the petitioner under the Goods and Services Tax Act, 2017, was allowed by a Single Judge Bench of Manish Choudhury, J., and the impugned order was set aside on the grounds of not being a speaking order as it was found to be passed arbitrarily, without recording reasons and due application of mind.
The Court observed that,
“An adjudicating authority exercising statutory power of cancelling registration under the CGST Act must record reasons for its decision when the statute itself contains a prescription to record reasons or decision falls short of the statutory prescription and would be in violation and thus, illegal.”
Background:
Petitioner had been carrying on her business in the name of a proprietorship firm, registered under the Central Goods and Services Tax Act, 2017 [CGST], having Registration Certificate in Form GST REG-06.
A show cause notice was issued to the petitioner by the Proper Officer asking her to show cause as to why the registration issued to her under the CGST Act should not be cancelled due to failure on her part to furnish timely returns under Section 39, CGST Act. Petitioner was asked to file a reply within thirty working days and appear before the Proper Officer on a specified date for personal hearing, failing which the case would be decided ex-parte on the basis of the available records and on merits. Another Notice in Form GSTR-3A under Rule 68, CGST Rules was issued declaring the petitioner a defaulter under Section 46, CGST Act, thus asked to furnish the returns within fifteen days failing which the petitioner would be assessed under Section 62, CGST Act.
Eventually, the impugned order dated 26 December 2024 cancelling the petitioner’s GST Registration with effect from 30 August 2024 was passed, without assigning any reasons. The proper officer, while cancelling the registration, merely noted that the same was “liable to be cancelled for following reason[s]: [1] Others”
Analysis:
The Court referred to several provisions of CGST Act and Rules such as Section 39(1), Section 29(2)(c), Rule 61(1), Rule 21(h), Rule 21A and Rule 22.
It was observed by the Court that the Proper Officer, while cancelling the GST Registration of the petitioner, did not assign any reasons in the Order. Moreover, A Registered Assessee is required to pay the statutory dues under the CGST or the SGST Act, to be paid by all the assesses registered under the GST regime, which contribute towards the State Exchequer.
The Court noted that if a taxable person is not included within the GST regime, then the statutory dues won’t be deposited and properly accounted for, which is not in the interest of the revenue and the cancellation of GST Registration would entail adverse consequences to the petitioner.
It was the finding of the Court that the impugned order was not in conformity with the procedure prescribed in FORM GST REG-19. The Court further stated that a speaking order is one which expressly states the reasons for the decision, speaking for itself by assigning the reasons behind the conclusion. If an order is passed without giving a reason by the concerned authority, then the order is a non-speaking one. Thus, a non-speaking order is one which does not provide a clear reason for its decision.
The Court held that the fact that the petitioner neither replied to the show cause notice nor did she appear before the Proper Officer for personal hearing, does not absolve the Proper Officer from the obligation of passing a speaking order as any order which brings adverse consequence to a person cannot be a mere paper formality.
The Court held that an adjudicating authority, exercising statutory power of cancelling GST registration must record reasons for its decision, unless such obligation is expressly or impliedly dispensed with. The Court found it to be implicit in the principles of natural justice and fair play that an adjudicating authority should record reasons as a part of fair procedure, more particularly, when the decision is likely to affect the right of the person concerned. Recording of reason is also prima facie suggestive of conscious application of mind. The obligation to record reasons also works as a check against arbitrary action on the part of the adjudicating authority invested with the statutory power to take a decision likely to affect the right of the person concerned. When the statute itself contains a prescription to record reasons in the decision, absence of reasons in the decision falls short of the prescription and would be in violation of the prescription and thus, illegal.
The Court also noted that FORM GST REG-19 also substantiates that the Proper Officer is obligated to record his reasons for taking the action of cancellation of GST Registration.
Decision:
Therefore, the Court held that the impugned Order was not a Speaking Order and was passed without any application of mind and for that reason it was set aside and quashed.
On the point of delay of one year and four months in filing the writ petition, from the date of order of cancellation of registration, the Court held that this point will not be considered due to the sensitivity and vulnerability of the cancellation of registration and its adverse effects on the petitioner.
Thus, the Court reverted the matter back to the stage of issuance of the show cause notice in FORM REG-17 and directed, that it is open for the petitioner to either submit a Reply to the Show Cause Notice dated 12.08.2024 showing reason[s] as to why the GST Registration should not be cancelled in terms of sub-rule [2] of Rule 22 of the CGST Rules read with Section 29[2][c] of the CGST Act OR furnish all the pending returns and make full payment of the tax dues along with applicable interest and late fee, the Proper Officer shall drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.
[Yamang Siram v. Union of India, WP(C)/185/2026, 2026:GAU-AP:413, decided on 29-04-2026]
Judgment authored by: Justice Manish Choudhury
Advocates who appeared in this case:
For Petitioners: Kipa Yamak
For Respondents: M.Kato, O.Jerang, T.Kipa
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