The Delhi High Court of Delhi has overturned the cancellation of GST registration for M/S. Rajdhani Trading Co., citing a violation of natural justice. The court’s ruling emphasises the importance of procedural fairness, particularly the requirement for a clear personal hearing process.
The writ petition centers around M/S Rajdhani Trading Co., a business registered under GST since July 29, 2021. The company faced issues when its GST registration was cancelled by an order dated May 30, 2022. This cancellation came after the company failed to file GST returns for six consecutive months, prompting the authorities to issue a Show Cause Notice (SCN) on May 19, 2022.
As per the SCN, M/S Rajdhani Trading Co. was required to provide a response within seven working days. Additionally, it suspended the company’s GST registration effective from the date of the SCN. Crucially, the SCN did not specify a date, time, or venue for a personal hearing, which is a significant procedural oversight.
The petitioner, M/S Rajdhani Trading Co., failed to respond to the SCN, leading to the cancellation of its GST registration. The registration was cancelled retroactively from July 31, 2021.
The petitioner, represented by Mr. Pranay Jain and Mr. Karan Singh argued that being a bona fide taxpayer, had settled the entire tax liability. The company sought the restoration of its GST registration, contending that without it, conducting business was untenable.
The respondent revenue, the Principal Commissioner of Department of Trade and Taxes, Government of NCT of Delhi, represented by Mr. Avishkar Singhvi, Mr. Shubham Kumar, Mr. Vivek Kumar Singh and Mr. Naved Ahmed contended that the GST registration cancellation was justified due to the petitioner’s failure to comply with statutory requirements by not filing returns for six months. However, they conceded that the lack of a clear personal hearing schedule in the SCN breached the principles of natural justice.
The court ruled that the procedural lapse invalidated the cancellation order and mandated the restoration of the GST registration for M/S Rajdhani Trading Co.
The petitioner company was directed to file outstanding GST returns and clear all tax dues within four weeks. Additionally, it was required to pay any penalties or charges imposed. Failure to comply within the stipulated time frame would result in the revocation of the restoration order.
The court stressed that all statutory notices must include detailed instructions for personal hearings to ensure a fair process. The judgment also clarifies that the respondents retain the right to initiate further proceedings for non-compliance or recovery of additional amounts if required.
In result, the division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta set aside the impugned order and directed that the petitioner’s registration be restored forthwith.
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