GST Registration Cancellation SCN Delay Violates Business Rights
In a significant verdict, the High Court has ruled that prolonged suspension of GST registration without timely conclusion of show cause notice (SCN) proceedings is unjust. The judgment reinforces that procedural delays in GST registration cancellation directly violate a taxpayer’s right to carry on business.
Background: GST Law on Registration Suspension
Under Section 29(2) of the CGST Act, 2017, the proper officer may cancel GST registration for specific reasons, such as:
- Non-filing of returns
- Fraudulent registration
- Non-compliance with GST provisions
Rule 21A of the CGST Rules allows temporary suspension of registration pending cancellation.
Key Legal Issue: Can GST Remain Suspended Indefinitely?
The High Court strongly objected to this, holding that:
- Mere issuance of SCN does not justify indefinite suspension
- Failure to conclude proceedings within a reasonable time violates Article 19(1)(g) (right to practice any profession or trade)
- The department must either revoke the suspension or issue a reasoned cancellation order after hearing the taxpayer
What the Court Said
Citing Natural Justice principles, the HC observed:
“Suspension of GST registration cannot be used as a punitive measure in the absence of timely adjudication. Administrative lethargy cannot override statutory rights.”
The court also referred to CBIC Instruction No. 03/2023-GST dated 14.06.2023, which directed proper officers to dispose of SCNs within timelines.
Expert View: What Tax Consultants Should Advise
CA firms and GST practitioners should:
- Track SCN timelines closely
- Approach HC through a writ petition if registration remains suspended beyond a reasonable time
This protects clients’ rights and prevents financial disruptions.
Compliance Tips for Businesses
- Regularly file returns to avoid auto-triggered cancellation
- Update email and mobile in the GST portal for timely alerts
- Maintain documentation to counter SCN allegations
Related Legal References
- Section 29, CGST Act – Cancellation of registration
- Rule 21A, CGST Rules – Suspension of registration
- Article 19(1)(g), Constitution of India – Right to practice trade
- Instruction No. 03/2023-GST – Timelines for adjudication
📖 CBIC Instruction PDF (official)
Summary
High Court says GST registration suspension without timely SCN conclusion violates trade rights. Officers must act within reasonable time under Rule 21A.
FAQs
Q1: Can GST registration be suspended without cancellation?
Yes, under Rule 21A, pending cancellation, registration can be temporarily suspended.
Q2: What can I do if my registration is suspended for months?
You can file a representation or move a writ petition if there’s undue delay.
Q3: How soon should SCN proceedings be completed?
Ideally within 30 days, per CBIC Instruction No. 03/2023-GST.
Final Word
GST compliance is not just about filings—it’s also about procedural fairness. At Efiletax, we help you file replies, represent your case, and restore your GST seamlessly.