The Lucknow Bench of the GST Appellate Tribunal and the Allahabad High Court set aside three registration cancellations founded on alleged inadmissible input tax credit, citing vague notices and the Sections 73–74 recovery route.

GSTAT Lucknow and the Allahabad High Court have set aside cancellations of GST registration founded on alleged wrongful availment of input tax credit (ITC) in violation of Section 16 of the CGST Act. The Tribunal held that a show cause notice (SCN) that names no supplier, GSTIN or period cannot support cancellation, and the High Court held that such disputes call for recovery under Sections 73 and 74. [BPJ Construction LLP v. Himanshu Verma, JC (IT), Lucknow & Ors., 2026-juristway.com-3280-GSTAT(Lucknow)-GST; Vilasa Developers v. Himanshu Verma, JC (IT), Lucknow & Ors., 2026-juristway.com-3281-GSTAT(Lucknow)-GST; Unnati Enterprises v. Union of India & Ors., 2026-juristway.com-3277-HC(Allahabad)-GST]

The two appeals were decided by Narendra Kumar, Member (Judicial), and Alok Chopra, Member (Technical). The writ petition was decided by Justice Shekhar B. Saraf and Justice Amitabh Kumar Rai.

BPJ Construction. The appellant’s registration was cancelled on 1 Apr 2026 on the allegation that it had claimed ITC on invoices of suppliers whose registrations stood cancelled. Its revocation application was rejected on 15 May 2026 and its appeal on 25 Sep 2026. The SCN dated 16 Mar 2026 said only that a Deputy Commissioner had orally informed the proper officer that the firm was regularly claiming ITC in violation of Section 16(2), and referred to an intimation under Section 74A. It named no supplier, GSTIN or period, and did not cite Section 29.

The Bench held: “A mere reference in the show cause notice to an oral intimation … cannot, by itself, constitute a valid and sufficient ground for cancellation of registration”. Relying on Nice Enterprises v. Deputy Commissioner ST (2024) and G.R. Infra Project Ltd. v. State of Madhya Pradesh (2026), it held that a deficient SCN cannot be cured later, so the first appellate authority could not invoke Section 29 for the first time. It also accepted that the appellate authority had relied on an enquiry report not mentioned in the SCN without giving the appellant a chance to rebut it, noting the limits on additional evidence under Rule 112.

The Bench treated the cancellation proceedings as distinct from the pending Section 74A proceedings, on which it made no finding. It also referred to Notification No. 05/2026-Central Tax dated 26 Oct 2026, which, it noted, omits wrongful availment of ITC in violation of Section 16 from the provision governing cancellation with effect from 1 Nov 2026.

Vilasa Developers. On identical facts, with an SCN of the same date and an intimation in Form GST DRC‑01A dated 23 Feb 2026, the Bench recorded the same findings.

Unnati Enterprises. The petitioner challenged an order dated 2 Jul 2026 cancelling its registration and an order dated 4 Aug 2026 on its revocation application. The Bench held that since the issue related to the non-deposit of ITC, the authorities ought to have proceeded for recovery under Sections 73 and 74 instead of cancelling the registration, which was not in consonance with the procedure established by law. It added: “Since the petitioner has been regularly filing his returns, we do not find any justification for cancellation of his registration.”

GSTAT Lucknow allowed both appeals, set aside the cancellation and appellate orders, and restored the registrations. The High Court directed the authorities to allow revocation in accordance with law, leaving them free to issue an SCN for any other violation.

2026-juristway.com-3280-GSTAT(Lucknow)-GST | 2026-juristway.com-3281-GSTAT(Lucknow)-GST | 2026-juristway.com-3277-HC(Allahabad)-GST