GST Demand Quashed for Portal-Only SCN Service After Registration Cancellation

The Allahabad High Court has reiterated that merely uploading a GST show-cause notice (SCN) on the GST portal may not provide effective service where the taxpayer’s GST registration has already been cancelled and business activities have ceased. In such circumstances, failure to adopt an effective alternative mode of communication can violate the principles of natural justice. 

Case Details

• Case: A.K. Traders v. State of U.P.

• Court: High Court of Allahabad

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• Writ Petition: Writ Tax No. 1013 of 2026

• Decision Date: 28 July 2026

• Provision involved: Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017

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• Bench: Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary 

Facts of the Case

The petitioner’s GST registration was cancelled on 2 January 2025. According to the facts recorded by the Court, no business was carried on by the petitioner after cancellation of the registration.

Subsequently, the Department issued a show-cause notice under Section 73 by uploading it on the GST portal. No alternative mode of service was adopted before the demand order was passed.

The petitioner challenged the resulting demand proceedings, contending that after cancellation of the GST registration, it was not expected to continuously monitor the GST portal.

High Court's Decision

The Allahabad High Court accepted the petitioner’s contention.

The Court observed that once the GST registration had been cancelled, the petitioner was not obligated to check the GST portal. Therefore, the SCN should have been served through an alternative mode so that the petitioner had a genuine opportunity to respond.

The Court found that the manner of service resulted in a violation of the principles of natural justice. Consequently:

• The impugned demand order dated 20 December 2025 was quashed and set aside.

• The Department was granted liberty to issue a proper notice.

• The Department may thereafter proceed in accordance with law. 

Relevance of Section 169 of the CGST Act

Section 169 of the Central Goods and Services Tax Act, 2017 prescribes various methods for serving notices, orders and other communications. These include direct delivery, registered or speed post, communication through the registered email address, making the communication available on the common portal, publication in a newspaper and other prescribed modes. 

Importantly, the statutory framework does recognise making a communication available on the common portal as one mode of service. The present ruling should therefore not be understood as holding that portal service is universally invalid.

Rather, the decision highlights the importance of effective notice and natural justice in the particular circumstances where registration has already been cancelled and business activity has ceased.

Earlier Judicial Support

The Allahabad High Court has taken a similar approach in earlier cases. In Ahs Steels v. Commissioner of State Taxes, the Court held that after cancellation of registration, the taxpayer was not obligated to check the GST portal and that a show-cause notice should be served through an alternative means. The Court set aside the order on the ground of violation of natural justice. 

The A.K. Traders ruling also relied upon the coordinate Bench decision in Katyal Industries v. State of U.P., Writ Tax No. 140 of 2026, and expressly agreed with the principle laid down there. 

Key Takeaway for Taxpayers

Businesses whose GST registrations have been cancelled should not assume that all post-cancellation proceedings automatically become invalid. At the same time, the Department must ensure that statutory notices provide a meaningful opportunity to the taxpayer to defend the case.

Taxpayers should therefore:

• Preserve records relating to cancellation of GST registration.

• Keep evidence regarding cessation of business, where applicable.

• Monitor communications received through registered email and other available channels.

• Promptly examine any demand or adjudication order issued after cancellation.

• Consider appropriate legal remedies where an order has been passed without effective notice or reasonable opportunity of being heard.

Conclusion

The decision in A.K. Traders v. State of U.P. reinforces an important procedural safeguard under GST law: a demand cannot ordinarily be sustained where the taxpayer was deprived of a meaningful opportunity to respond because of ineffective service of the SCN.

The ruling is particularly relevant to taxpayers whose GST registrations have been cancelled and who have subsequently ceased business operations. However, each case must be examined on its own facts, including the manner of service, the taxpayer’s available contact details and the statutory provisions applicable to the proceedings.

For expert guidance on this topic, contact your tax professional today.

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