The Delhi High Court in a recent decision observed that clear reasons should be indicated in show cause notice (SCN) for which Goods and Service Tax (GST) registration cancellation is proposed.
The petitioner, M/s Frequent Logistics Services Pvt Ltd, has filed the present petition, inter alia, impugning an order (‘the impugned order’), whereby the petitioner’s GST registration was cancelled. The impugned order was passed pursuant to a Show Cause Notice. A plain reading of the Show Cause Notice indicated that the petitioner’s GST Registration was proposed to be cancelled for the following reason: “In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.”
The petitioner was called upon to respond to the said Show Cause Notice within a period of seven working days and was also directed to appear before the proper officer. The Show Cause Notice also reflected that the petitioner’s GST registration was suspended with effect from 20.05.2022.
The petitioner did not file a reply to the said Show Cause Notice within the stipulated time. In the meanwhile, the proper officer passed the impugned order cancelling the petitioner’s registration with retrospective effect from 27.07.2017. The only reason stated in the said order for cancelling the petitioner’s registration reads as under: “Reply not receive. Hence, the registration Suo Moto cancelled.”
A Division Bench of Justices Vibhu Bakhru and Amit Mahajan observed that “It is clear from the above that the impugned order is not informed by reason as it does not reflect any intelligible reason as to why the petitioner’s GST registration was cancelled. Further, the Show Cause Notice did not disclose that the petitioner’s GST Registration was proposed to be cancelled with retrospective effect. The impugned order for the cancellation of the GST registration also does not reflect any ground to support the decision to cancel the GST registration with retrospective effect.”
“The present petition is allowed solely on the ground that the Show Cause Notice falls short on the standards required of a Show Cause Notice. At the least, the Show Cause Notice must clearly indicate the reasons for which an adverse order is proposed to be passed in order for the noticee to respond to the same” the Court concluded.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
