Gauhati High Court Restores GST Registration of Arunachal Factory Over Notice Violation
Changlang, Arunachal Pradesh | In a significant development highlighting the importance of due process in tax administration, the Gauhati High Court has set aside the cancellation of GST registration of an Arunachal-based wood factory, citing lack of proper notice to the petitioner. The ruling comes as a relief for Devendra Singh Rathore, a wood-based industry operator who challenged the cancellation on grounds of procedural lapse and non-service of mandatory show-cause notice.
Case Background: GST Revoked Without Notice
Devendra Singh Rathore had been operating a wood-based factory located at 9th Mile, Changlang, Arunachal Pradesh, under a lease agreement with the actual landowner, Shri Thinghaap Taiju. However, the factory remained non-operational during 2023–2024 due to a shortage of raw materials, resulting in a temporary halt in business activities.
Despite the inactivity, the business was dependent on an active GST registration for issuing invoices, filing returns, and claiming Input Tax Credit (ITC). In December 2023, Rathore received a cancellation order dated 04.12.2023, passed by GST authorities, citing non-filing of returns and a show-cause notice dated 11.10.2023.
No Show-Cause Notice Received, Claims Petitioner
What raised serious legal concerns was the fact that Rathore never received the show-cause notice, which is a mandatory requirement under GST law before cancelling any registration. The petitioner claimed that the notice was not served via any official mode—neither by registered post, nor by email, nor even through the GST portal.
“No intimation or reminder was sent. The cancellation came without warning,” said Rathore in his representation to the court.
Petitioner Paid Dues, Yet Revocation Ignored
Upon learning about the cancellation, Rathore immediately acted by:
- Paying overdue GST dues and fine, totaling ₹2,74,225,
- Making payments on 19.03.2025 and 24.03.2025,
- Filing a formal application for revocation of the cancellation order.
Despite full compliance, the respondent authorities failed to respond to the revocation application. Left with no alternative, Rathore moved the Gauhati High Court, requesting the restoration of his GST registration bearing number GSTIN12AFOPT1605H3ZI.
Court Observations: Justice Robin Phukan Rules in Favor
A single bench of Justice Robin Phukan heard the matter and found merit in the petitioner’s claims. The court emphasized that natural justice was denied, as the show-cause notice was not duly served, making the entire cancellation process procedurally defective.
Key Observations by the Court:
- Cancellation without proper notice violates legal principles.
- There was no evidence of delivery of the show-cause notice.
- The petitioner paid outstanding dues and showed intent to comply.
- Authorities failed to respond to the revocation application, indicating administrative lapse.
Final Order:
“The impugned cancellation order dated 04.12.2023 stands set aside. The respondents are directed to verify if any further dues remain, and if so, notify the petitioner accordingly,” Justice Phukan ruled.
Legal Context: GST Law and Procedural Safeguards
Under Rule 22 of the CGST Rules, 2017, any taxpayer facing cancellation must be issued a show-cause notice in prescribed format and must be given an opportunity to explain and rectify defaults before final cancellation.
Furthermore, Section 29(2) of the CGST Act allows cancellation only after justifiable reasons and proper communication. In this case, failure to follow these protocols led to the judicial intervention.
What This Means for Businesses
This case highlights the critical need for GST authorities to follow due process and serve notices via acceptable channels. For businesses, especially those in remote and rural areas like Arunachal Pradesh, this ruling reinforces their legal right to be heard before any penal action is taken.
The judgment sets a precedent that:
- Administrative convenience cannot override legal obligations.
- Non-receipt of notice is valid ground for challenging cancellation.
- Restoration of GSTIN is possible through legal recourse if cancellation was unlawful.
Reader Takeaway
For small business operators and factory units across India, this judgment is a reminder that compliance issues must be addressed, but not at the cost of fairness and transparency. GST authorities must ensure that proper notices are issued and acknowledged before taking adverse actions like deregistration.
Meanwhile, taxpayers are advised to monitor their GST portal dashboards regularly, maintain updated contact details, and respond promptly to any communication from tax authorities.
Fairness in Taxation Must Prevail
The Gauhati High Court’s verdict not only provides relief to a struggling factory owner in Arunachal Pradesh but also upholds the core legal principle of audi alteram partem—the right to be heard.
As GST evolves into a cornerstone of India's indirect tax system, ensuring procedural integrity becomes equally important as ensuring tax compliance.