Court rules that where a registered person’s bank account is flagged as frozen or blocked, the Proper Officer must issue notice in Form GST REG-31 with a thirty-day opportunity to respond—not Form GST REG-17 with a seven-day window—before cancelling GST registration for non-compliance with Rule 10A.
GUWAHATI, May 29, 2026:
The Gauhati High Court has set aside an order cancelling the GST registration of Huma Power & Tower Pvt. Ltd., a Guwahati-based private limited company, after finding that the Proper Officer committed a double procedural violation: issuing the Show-Cause Notice in the wrong statutory form and granting the company only seven working days to respond instead of the thirty days mandated by law.
Hon’ble Mr. Justice Manish Choudhury allowed the writ petition, WP(C) No. 2147/2026, and directed the respondent authorities to restore the company’s GST registration with immediate effect. The Court, however, clarified that the restoration of registration would not extinguish any outstanding tax liabilities or statutory obligations of the petitioner.
Background
Huma Power & Tower Pvt. Ltd. was granted GST registration under the CGST Act on 20 September 2017, bearing Registration Certificate No. 18AACCH1766M2Z7. The company’s principal place of business was recorded as Athgaon Kabaristan, N.S. Road, Guwahati, Kamrup Metropolitan District, Assam.
On 19 May 2025, the Assistant Commissioner of State Tax, Guwahati (Respondent No. 3), issued a Show-Cause Notice proposing cancellation of the company’s GST registration. The notice alleged violation of Rule 10A read with Rule 21(d) of the CGST Rules, which requires a registered person to furnish valid bank account details on the GST common portal within the prescribed time.
The remarks accompanying the notice stated:
“The Bank Account has been validated successful with remark ‘Account Frozen or Blocked’. Please reverify the Account details.”
The notice was issued in Form GST REG-17 and required the petitioner to submit a reply within seven working days. Notably, the notice failed to specify any date, time, or venue for personal hearing, with the relevant fields displaying the words “undefined at undefined.”
According to the petitioner, the notice was uploaded only on the GST common portal and no separate communication was received. Consequently, the company did not become aware of the notice immediately. Upon learning about it, the petitioner approached the Proper Officer and sought time to rectify the issue relating to its bank account, which was maintained at a branch in Lucknow, Uttar Pradesh. The petitioner also requested an extension for filing its reply. However, according to the petitioner, the request was verbally declined.
Thereafter, on 9 June 2025—only twenty-one days after issuance of the Show-Cause Notice—the Proper Officer passed an order cancelling the GST registration with immediate effect, recording that no reply had been received from the taxpayer.
Subsequently, the petitioner attempted to update its bank account details through Form GST REG-14 on the GST portal but was unable to do so due to the cancellation of registration. The company also sought to apply for revocation of cancellation but found that the statutory time limit for filing such an application had already expired. Left without any effective administrative remedy, the petitioner approached the High Court.
Statutory Framework Examined by the Court
The Court undertook a detailed examination of the statutory provisions governing cancellation of GST registration on account of non-compliance with bank account requirements.
Section 29(2)(a) of the CGST Act empowers the Proper Officer to cancel registration where a registered person contravenes provisions of the Act or the Rules.
Rule 10A of the CGST Rules, inserted through Notification No. 31/2019-Central Tax dated 28 June 2019, requires every registered person to furnish bank account details on the common portal within thirty days from the date of grant of registration or before filing the first GSTR-1 return, whichever is earlier.
The Court observed that Rule 21A(2A)(b), substituted through Notification No. 38/2023-Central Tax dated 4 August 2023, specifically governs situations involving contravention of Rule 10A. Under this provision, where a taxpayer fails to comply with Rule 10A, the registration is first liable to be suspended and the registered person must be informed through Form GST REG-31, either electronically on the common portal or through e-mail. The taxpayer must then be given thirty days to explain why the registration should not be cancelled.
The Court contrasted this special procedure with Rule 22(1) of the CGST Rules, which prescribes the general procedure for cancellation of registration under Section 29. Under Rule 22, a Show-Cause Notice is issued in Form GST REG-17 and the taxpayer is required to respond within seven working days.
Court’s Findings
Justice Manish Choudhury found two fundamental defects in the action of the Proper Officer.
Wrong Statutory Form Used
The Court noted that the alleged violation related specifically to Rule 10A concerning furnishing of bank account details. In such cases, Rule 21A(2A)(b) expressly requires issuance of an intimation in Form GST REG-31.
However, the Proper Officer issued the notice in Form GST REG-17, which is meant for the general cancellation procedure under Rule 22.
The Court held that where the legislature has prescribed a specific procedure for dealing with a particular category of non-compliance, the authorities are bound to follow that procedure strictly.
The Court observed:
“When a specific procedure has been prescribed for cancellation of registration for contravention of Rule 10A, resort cannot be taken to some other provision.”
Failure to Grant Thirty-Day Response Period
The Court further observed that Rule 21A(2A)(b) mandates a period of thirty days for the taxpayer to respond.
Instead, the petitioner was granted only seven working days because the notice had been issued in Form GST REG-17.
Moreover, the cancellation order itself was passed on 9 June 2025, before expiry of thirty days from the date of the notice dated 19 May 2025.
According to the Court, this not only violated the express statutory requirement but also deprived the petitioner of an effective opportunity to present its case.
The Court held:
“By not affording the statutorily prescribed thirty-day period to show cause in Form GST REG-31, the Proper Officer deprived the petitioner of an effective and reasonable opportunity of being heard.”
The Court concluded that the action amounted to a violation of the principles of natural justice in addition to being contrary to the statutory scheme under Section 29 of the CGST Act read with Rules 10A and 21A(2A)(b) of the CGST Rules.
Decision
In light of these findings, the Gauhati High Court quashed both:
- The Show-Cause Notice dated 19 May 2025; and
- The Order of Cancellation dated 9 June 2025.
The Court directed the GST authorities to restore the GST registration of Huma Power & Tower Pvt. Ltd. bearing Registration No. 18AACCH1766M2Z7, originally granted on 20 September 2017.
At the same time, the Court clarified that restoration of registration would not affect any liability of the petitioner to pay tax, interest, penalty, or any other statutory dues, nor would it absolve the petitioner from complying with obligations under the CGST Act and the Rules.
No order as to costs was passed.
Significance of the Ruling
The judgment provides important guidance on the procedure that GST authorities must follow while initiating cancellation proceedings based on bank-account related non-compliance under Rule 10A.
The ruling makes it clear that:
- Cancellation proceedings for Rule 10A violations must follow the special procedure prescribed under Rule 21A(2A)(b);
- Form GST REG-31 is mandatory in such cases;
- Taxpayers must be granted thirty days to respond;
- The general cancellation mechanism under Rule 22 and Form GST REG-17 cannot be substituted for the specific procedure prescribed for Rule 10A violations; and
- Failure to follow the prescribed procedure renders the cancellation proceedings vulnerable to judicial review.
The decision also serves as a reminder for businesses to regularly monitor their GST portal for notices and communications. Since many GST notices are uploaded electronically without separate physical communication, taxpayers may inadvertently miss important notices, potentially resulting in adverse consequences such as cancellation of registration and expiry of the statutory revocation period before they become aware of the proceedings.
Case: Huma Power & Tower Pvt. Ltd. v. Union of India & Others
Court: Gauhati High Court
Case No.: WP(C) No. 2147/2026
Judge: Hon’ble Mr. Justice Manish Choudhury
Decision Date: 29 May 2026