Singhal Singh Rawat v Commissioner of Central Goods and Services Tax (Delhi High Court)

The Delhi High Court held that cancellation of GST registration with retrospective effect without providing sufficient opportunity to be heard was unjustified. Accordingly, the order canceling the GST registration is set aside.

Facts- The petitioner has been registered under the provisions of the Central Goods and Services Tax Act, 2017 and the Delhi Goods and Services Tax Act, 2017. The petitioner filed an application on 02.11.2022 seeking cancellation of its GST registration on the ground that it has closed its doors. his business.

The competent officer issued the notice dated 04.11.2022 and asked the petitioner to show cause why his application should not be rejected. The petitioner did not respond to the notice dated 04.11.2022 and, therefore, the application for cancellation of his GST registration was dismissed by an order dated 16.11.2022.

Subsequently, on 17.11.2022, the Competent Officer issued the disputed SCN. The only reason given in the impugned SCN for proposing to cancel the GST registration of the petitioner reads as follows: “Non-existent”. The impugned order canceling the GST registration of the petitioner does not state any reason for the cancellation of the GST registration of the petitioner except by referring to the impugned SCN. The petitioner is fundamentally aggrieved by the cancellation of GST registration with retrospective effect.

Conclusion- We have found that we accept the petitioner’s contention that he was not given sufficient opportunity to respond to any proposed action seeking cancellation of his GST registration with retrospective effect. Thus, we consider it appropriate to set aside the impugned order canceling the GST registration of the petitioner with retrospective effect and permit the petitioner to file a reply to the impugned SCN assuming that the latter proposes to cancel GST registration of the applicant with retroactive effect.

FULL TEXT OF THE DELHI HIGH COURT JUDGMENT/ORDER

1. The applicant filed the present application, among others, challenging the show cause notice dated 17.11.2022 (hereinafter the SCN attacked) whereby the petitioner was asked to show cause why his Goods and Services Tax (GST) registration should not be cancelled. The petitioner also challenges the annulment order dated 25.11.2022 (hereinafter the contested annulment order), whereby the GST registration of the petitioner was canceled with retrospective effect from 11.03.2020.

2. The petitioner has been registered under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter the CGST law) and the Delhi Goods and Services Tax Act, 2017 (hereinafter the DGST law) and has been assigned the Goods and Services Tax Identification Number (GSTIN): 07BLWPR7053N1ZO.

3. The petitioner filed an application on 02.11.2022 seeking cancellation of his GST registration. The copy of the said application has not been annexed to the present petition. The learned counsel appearing for the petitioner submits that since the petitioner’s access to the GST portal has been restricted, he is not in a position to access the same. Learned counsel for the petitioner states that the petitioner had sought cancellation of his GST registration because he had closed down his business.

4. The competent officer issued the notice dated 04.11.2022 and asked the petitioner to show cause why his application should not be rejected. A bare reading of the aforesaid notice indicates that the concerned officer asked the petitioner to submit various documents, which at first glance, are relevant for determining the liability of the petitioner under the CGST Act/DGST Act. The petitioner was asked to furnish party-wise purchase details along with the E-way invoice; Input Tax Credit (ITC) used in GSTR-3B compared to GSTR-2A and GSTR-1; details used as per GSTR-3B; the details of input stock as per Section 29(5) of the CGST Act as on the date immediately preceding the date of cancellation.

5. The petitioner did not respond to the notice dated 04.11.2022 and, therefore, his application for cancellation of his GST registration was dismissed by order dated 16.11.2022.

6. Subsequently, on 17.11.2022, the Competent Officer issued the impugned SCN. The only reason given in the impugned SCN for proposing to cancel the GST registration of the petitioner reads as follows: “Non-existent”.

7. It is also important to note that the impugned SCN has not proposed to cancel the GST registration of the petitioner with retrospective effect. However, a letter dated 11.11.2022 sent by the Deputy Commissioner (Anti-Avoidance), Commissioner CGST West to the Deputy Commissioner, Janakpuri Division, CGST West has been screened on the GST portal. The said letter states that upon physical verification carried out at the premises of the principal place of business of the petitioner, the business was found to be non-existent. Under the said letter, the competent officer was asked to initiate the cancellation procedure from the date of registration.

8. It is also important to note that the above-mentioned letter does not provide any details as to the date on which the physical verification was carried out. He also provided no evidence enabling the competent official to conclude that the applicant never existed at the main establishment.

9. The impugned order canceling the GST registration of the petitioner does not state any reason for the cancellation of the GST registration of the petitioner except by referring to the impugned SCN.

10. The petitioner is essentially aggrieved by the cancellation of GST registration with retrospective effect. We accept the petitioner’s contention that he was not given sufficient opportunity to respond to any proposed action for cancellation of his GST registration with retrospective effect.

11. In view of the above, we consider it appropriate to set aside the impugned order canceling the GST registration of the petitioner with retrospective effect and permit the petitioner to file a reply to the impugned SCN on the assumption that the latter proposes to cancel the GST registration of the applicant with retrospective effect. The applicant is free to provide all documents and elements deemed relevant to establish that it existed at the declared principal place of activity until the closure of the business in November 2022. The applicant may file the response to the request contested. SCN within three weeks from the date. The appropriate officer will examine the matter and pass appropriate order after giving the applicant an opportunity to be heard personally as expeditiously as possible, preferably within the period of two months after the personal hearing.

12. The application is resolved in the above-mentioned terms.