The Allahabad High Court directed revocation of a regularly filing trader’s cancelled GST registration, holding that an input tax credit dispute must be pursued through demand proceedings, not cancellation.
The Allahabad High Court has held that where the issue is non-deposit of input tax credit (ITC), the authorities must take steps for its recovery under Sections 73 and 74 of the CGST Act, 2017, and cannot instead cancel the taxpayer’s registration. A Division Bench of Justice Shekhar B. Saraf and Justice Amitabh Kumar Rai decided the writ petition, filed under Article 226 of the Constitution, after hearing counsel for the petitioner and for the Union of India [Ram Traders v. U.O.I. & Ors., 2026-juristway.com-3217-HC(Allahabad)-GST].
The petitioner challenged an order dated 21 May 2026 cancelling its GST registration and a later order dated 9 Sep 2026 passed on its application for revocation of the cancellation. The High Court’s order does not record the amount of ITC involved or the grounds stated in the cancellation order.
On perusing the impugned orders, the Court found that the issue related to non-deposit of ITC. It held that the authorities “ought to have taken appropriate steps for the recovery of the said Input Tax Credit under Sections 73 and 74”, and that cancelling the registration instead was “not in consonance with the procedure established by law.”
Noting that the petitioner had been regularly filing its returns, the Court found no justification for the cancellation and directed the authorities to allow revocation of the cancellation in accordance with law. The Court made it clear that the authorities remain free to issue a show cause notice in respect of any other violation of law, following the procedure established by law. The writ petition was disposed of with these directions.
2026-juristway.com-3217-HC(Allahabad)-GST
