Delhi HC sets aside GST Registration cancellation Order Passed without Disclosing Reason [Read Order]

The Delhi High Court in its recent judgement has set aside the order cancelling the Goods and Service Tax (GST) registration order passed without disclosing reason.

Sh. Sachin Upadhyay, the petitioner has filed the present petition impugning an order whereby, the petitioner’s application for revocation of the cancellation of his GST registration, was rejected. 

The petitioner was registered with the GST authorities on 05.02.2020 and allocated GSTIN/UNIQUE ID: 07AIOPU4857B1ZV.  The petitioner claims that on 14.03.2020, the petitioner opened a bank account with AU Small Finance Bank Ltd. and uploaded the details of the same on the GST portal. 

The petitioner’s GST registration was suspended and he was called upon to furnish a reply to the show cause notice within seven working days and appear before the Proper Officer on 08.12.2021. 

It was evident that the show cause notice did not provide any clue as to the reason for proposing the cancellation of the petitioner’s GST registration. In numerous decisions, the court held that such show cause notices, which do not specifically state the reason for proposing adverse actions cannot be sustained. The purpose of the show cause notice is to enable the notice to respond to the allegations.

The Proper Officer proceeded to cancel the petitioner’s GST registration by an order dated 03.01.2022 on the ground that the petitioner had not uploaded the bank details as evident from the response form. It is also material to note that the petitioner’s GST registration was cancelled with retrospective effect from 06.02.2020.

The petitioner applied for revocation of the cancellation order. The petitioner also sent emails, once again, setting out the details of his bank accounts. The petitioner also asserted that the same was uploaded on the GST portal before the issuance of the show cause notice dated 05.12.2021.

The petitioner’s application for revocation of cancellation of the GST registration was rejected on the ground that the petitioner had not replied to the show cause notice within the time specified therein.  The petitioner preferred an appeal under Section 107 of the Central Goods and Services Tax Act, 2017 (the CGST Act’) impugning the order dated 10.03.2022. 

It was evident that the petitioner had submitted the bank details and uploaded them on the GST portal since the date of registration. The appellant had also attached the screenshots of the GST portal showing the bank details and had submitted a copy of the blank cheque for reference.

A division bench comprising Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed that “Since the impugned show notice dated 5.12.2021 failed to disclose the reason for proposing cancellation of the petitioner’s GST registration, the impugned order cancelling the petitioner’s registration falls foul of the principles of natural justice.”

The Court set aside the orders cancelling the petitioner’s registration and the petition is allowed with costs, quantified at ₹5,000/-.

To Read the full text of the Order CLICK HERE

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