In a recent Judgement, the Delhi High Court has set aside a GST demand of ₹2, 33, 46,912, crores, citing the non-receipt of a Show Cause Notice (SCN) and the inaccessibility of the GST portal following the director’s death and subsequent closure of the business.
The petitioner, Retrovis Fashion pvt.ltd has initiated a challenge against an order dated April 2, 2024, issued by the Adjudicating Authority under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Delhi Goods and Services Tax Act, 2017 (DGST Act). This order confirmed a demand of ₹2, 33, 46,912, which includes both interest and penalty.
The contested order originated from a Show Cause Notice (SCN) issued on December 27, 2023. The petitioner claims it did not receive the SCN, which hindered its ability to respond. Several reasons were provided for the non-receipt, including the passing of the authorized signatory registered in the GST portal due to COVID-19 on November 16, 2020.
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Following this, access to the GST portal was further obstructed due to the cancellation of the registration, with the deceased signatory being the sole individual authorized to access the portal. The petitioner also indicated that it had ceased business operations on April 1, 2019. Despite the respondent’s issuance of the SCN and a subsequent notice for a personal hearing via the GST portal on February 29, 2024, the petitioner was unable to access the portal because of the earlier cancellation and the authorized signatory’s death. Additionally, no notice was delivered to the petitioner via physical mail.
The petitioner reported that its GST registration was canceled on January 13, 2020. The company, a closely held entity, was primarily managed by its director, Mr. Vikas Gupta, who also served as the authorized signatory in the GST records. Following Mr. Gupta’s death on November 16, 2020, the company discontinued its business operations. The petitioner’s counsel Mr. Mukesh Chand highlighted that the email ID provided to the GST authorities belonged to Mr. Gupta, and since business operations had ceased, there was no opportunity to verify this information.
Mr. Gupta, representing the respondent, fairly stated that the explanation for the non-receipt of the SCN merits consideration.
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Consequently, the division bench comprising Justice Vibhu Bhakru and Justice Sachin Datta has set aside the impugned order and remanded the matter to the Adjudicating Authority for fresh consideration. The bench directed that the petitioner may submit a response to the SCN within two weeks from the date of this order. The Adjudicating Authority is instructed to review any reply submitted and issue a reasoned order, providing the petitioner with an opportunity to be heard. The present petition has thus been disposed of.
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