In two cases, the Allahabad High Court ruled that GST registration cannot be cancelled, or its revocation refused, as a means of recovering disputed tax or input tax credit.
The Allahabad High Court has held in two orders that tax authorities cannot cancel a GST registration, or refuse to revoke a cancellation, to recover disputed input tax credit (ITC) or tax, when the law provides for recovery through proceedings under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017 (CGST Act) [Kirti Enterprises v. State of U.P. & Ors., 2026-juristway.com-3357-HC(Allahabad)-GST; Innovative Events and Promotion v. State of U.P. & Ors., 2026-juristway.com-3358-HC(Allahabad)-GST].
Both orders were passed by Justice Shekhar B. Saraf and Justice Amitabh Kumar Rai on writ petitions under Article 226 of the Constitution. Section 73 provides for demands of unpaid tax or wrongly availed ITC in ordinary cases, while Section 74 applies where fraud, wilful misstatement or suppression of facts is alleged.
Kirti Enterprises. The petitioner’s registration was cancelled by an order dated 2 Apr 2026 over the non‑deposit of ITC. The Court held that the authorities ought to have taken steps to recover that ITC under Sections 73 and 74, and that cancelling the registration instead was not in consonance with the procedure established by law. Since the petitioner had been regularly filing returns, the Court found no justification for the cancellation.
The authorities were directed to allow revocation of the cancellation in accordance with law. The Court made clear that they remain at liberty to issue a show cause notice for any other violation, following the procedure established by law.
Innovative Events and Promotion. The registration was cancelled by an order dated 10 Jun 2026 in Form GST REG‑19 with effect from 20 May 2026, and a notice under Section 74 was issued afterwards. The application for revocation was rejected on 14 Aug 2026 on the ground that the petitioner should first deposit the disputed amount.
The Court held that this stand was not correct. Separate proceedings under Section 74 had already been initiated, and any liability had to be imposed under that provision. It quashed both the cancellation order and the order rejecting revocation, and directed the petitioner to comply with the Section 74 notice in accordance with law.
Together, the two orders confine the disputed demand to adjudication under Sections 73 and 74, and leave registration to be decided on its own grounds.
2026-juristway.com-3357-HC(Allahabad)-GST | 2026-juristway.com-3358-HC(Allahabad)-GST
