Cancellation Of GST Registration Announces Economic Death Of Business Entity; Reasoned Order Needed: Allahabad High Court

The bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla observed: “We are equally mindful that the order of cancellation of registration causes deep adverse impact on the conduct of business of any registered individual. Neither the petitioner shall remain entitled to issue Tax Invoices nor may be entitled to avail tax ITC or to pass on ITC. Under the GST regime, it announces the economic death of the business entity.”

Petitioner approached the High Court against the cancellation of it's GST registration by the Assistant Commissioner, State Tax, Bhadohi Sector-1, Uttar Pradesh.

The Court observed that petitioner's reply was treated as 'not satisfactory' by the authority, however, no reasons were assigned for terming the reply as not satisfactory.

“It is a sine qua non and absolutely fundamental to procedural law as may be plain to a law student that such a requirement is non-negotiable. Therefore, we are at loss to understand what would have compelled respondent no.2 to pass such a non-speaking order.”

While setting aside the cancellation order, the Court directed the Commissioner, Commercial Tax, Uttar Pradesh to transfer the cancellation proceedings to an officer who was aware of the law and thereafter, issue appropriate administrative instructions to all the officers/authorities under the GST to ensure that such action is not repeated in future by other proper officers/authority (dealing with matters on cancellation of registration ), except at risk of appropriate administrative action.

Case Title: M/S Anil Art And Craft Versus State Of Uttar Pradesh And Another [WRIT TAX No. - 5924 of 2025]

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