Intro Paragraph:
The GST registration cancellation process is not automatic or arbitrary. As per GST law and recent judicial rulings, GST registration cannot be cancelled without proper verification of the taxpayer’s evidence, documents, and responses. This protects genuine taxpayers from wrongful cancellation and ensures procedural fairness.
Why Proper Verification Matters in GST Cancellation
Under Section 29 of the CGST Act, GST officers can cancel a registration for valid reasons like non-filing of returns or non-business activity.
However, cancellation without verifying the taxpayer’s reply violates natural justice and legal mandates.
Key Requirements Before Cancelling GSTIN:
- Officer must issue a Show Cause Notice (SCN) under Rule 22(1)
- Taxpayer should be allowed to respond within 7 working days
- Authority must consider all replies and documents submitted
- Final cancellation order must be a reasoned speaking order
Recent High Court Rulings
Courts across India have quashed cancellation orders where authorities failed to verify taxpayer submissions:
| Case | Key Finding |
|---|---|
| Shri Shyam Hardware v. State of Bihar | Cancellation without considering reply is unsustainable |
| Mahadev Trading Co. v. State of Gujarat | SCN was vague, cancellation order set aside |
| Kashi Bartan Bhandar v. State of UP | No evidence review done — order violated Rule 22(3) |
These cases reinforce that procedural compliance is mandatory before GSTIN cancellation.
Legal Provisions You Must Know
- Section 29(2): Lists grounds for cancellation
- Rule 21 & Rule 22: Outline procedure and documentation
- Circular No. 127/46/2019-GST: Clarifies process for suo-motu cancellation
Even if discrepancies exist, the taxpayer has the right to explain or correct them before any action is taken.
Expert Insight:
CA Rohit Bansal, Indirect Tax Expert:
“We see multiple cases where genuine businesses face cancellation due to procedural gaps. Timely response with supporting evidence is key — and officers are bound to verify before taking any final step.”
What Should You Do If You Receive an SCN?
Here’s a step-by-step guide:
- Read the SCN carefully
– Note reason, timeline, and documents required - Prepare a detailed reply
– Attach bank statements, invoices, proof of business - Submit online via GST portal
– Within 7 working days - Keep acknowledgment and email records
– For legal protection - Follow up
– Check status and file grievance if needed
Common Mistakes to Avoid
- Ignoring the SCN
- Submitting generic or incomplete replies
- Not attaching relevant proofs
- Assuming cancellation is final (you can appeal under Section 107)
Efiletax Can Help You
Got a GST SCN or worried about cancellation?
Let our experts help you draft the right reply and avoid business disruptions.
Optional FAQ Section
Q1. Can GST registration be cancelled without issuing a Show Cause Notice?
No. As per Rule 22(1), issuing an SCN is mandatory before cancellation.
Q2. Can I restore a wrongly cancelled GSTIN?
Yes. You can file an appeal under Section 107 of CGST Act within 3 months.
Q3. What happens if I don’t reply to the SCN?
Your GSTIN may be cancelled ex-parte, and you may face penalties or business disruption.
Summary
GST registration cannot be cancelled without proper verification and a chance for the taxpayer to respond. As per Rule 22 and court rulings, cancellation without evaluating replies and documents is invalid. Always respond to SCNs with proof and seek expert help when needed.