Delhi HC Sets Aside GST Cancellation Order and SCN, Citing Violations of Natural Justice and Procedural Irregularities [Read Order]
The court highlights procedural errors and inadequate consideration of petitioner’s response in GST cancellation.
![Delhi HC Sets Aside GST Cancellation Order and SCN, Citing Violations of Natural Justice and Procedural Irregularities [Read Order] Delhi HC Sets Aside GST Cancellation Order and SCN, Citing Violations of Natural Justice and Procedural Irregularities [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/08/Delhi-HC-GST-Cancellation-GST-Cancellation-Order-SCN-delhi-hc-on-gst-cancellation-delhi-hc-on-gst-cancellation-order-delhi-hc-news-gst-gst-news-scn-news-taxnews-taxscan.jpg)
In the concerned case, the High Court Of Delhi, disposed of the petition by setting aside the impugned cancellation order and the show cause notice (SCN),finding that the cancellation process violated principles of natural justice.
Discovery India Service, the petitioner-assessee, had filed a petition seeking a direction for the restoration of its Goods and Services Tax (GST) registration and had also challenged the order dated 16.10.2023, in which its GST registration had been cancelled.
Get a Copy of GST Ready Reckoner, Click here
A SCN was issued by the Proper Officer on 26.09.2023, asking the petitioner to explain why their GST registration should not be cancelled. Along with the SCN, a letter from the Office of the Principal Commissioner of GST and Central Excise was also included, requesting the cancellation of GST registrations for certain taxpayers, including the petitioner.
The letter’s tabular statement showed that the reason for seeking the cancellation was that the petitioner was found to be ‘non-existent.’
Get a Copy of GST Ready Reckoner, Click here
The petitioner was asked to reply to the SCN within seven working days and to appear before the proper officer on 03.10.2023. The petitioner’s GST registration was suspended from 26.09.2023.
The petitioner responded to the SCN on 06.10.2023, providing documents to support their claim of business existence. These documents, however, were not filed with the petition. The petitioner’s counsel, appearing via video conference, explained that the documents could not be downloaded from the portal but were in their possession. The documents included a rent agreement, PAN card, Aadhaar card (front and rear), and an electricity bill.
Get a Copy of GST Ready Reckoner, Click here
Even though the petitioner responded to the SCN, the Proper Officer issued a cancellation order for the GST registration effective from 25.09.2022. The order did not address the petitioner’s reply or explain why it was rejected.
The court noted that the documents, including the inspection report, Panchnama, and photograph, were not attached to the SCN despite being with the Proper Officer and contended that since the cancellation decision relied on these documents, they should have been provided to the petitioner to allow for a proper response
Get a Copy of GST Ready Reckoner, Click here
The bench stated that the cancellation order lacked justification, did not consider the petitioner’s reply, and failed to provide the inspection report, Panchnama, and photograph used in the decision. This violated natural justice by not allowing the petitioner to address these documents.
The court contended on behalf of the petitioner that their GST registration was cancelled retrospectively from 25.09.2022, although no such action was proposed in the SCN. Consequently, the petitioner did not have the opportunity to respond to the retrospective cancellation.
Get a Copy of GST Ready Reckoner, Click here
The division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta set aside the impugned cancellation order and SCN and directed that if the respondent wishes to cancel the petitioner’s GST registration, they must issue a new SCN detailing all grounds for the action and follow the legal process.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
M/S DISCOVERY INDIA SERVICE vs PRINCIPAL COMMISSIONER OF GOODS AND SERVICE TAX NORTH DELHI , 2024 TAXSCAN (HC) 1781 , Mr Pranay Jain, Mr Karan Singh , Mr Aakarsh Srivastava, Mr Vaibhav Gupta