Delhi HC Sets aside GST Registration Cancellation Order passed without Stating Reason [Read Order]

The Delhi High Court in a recent case set aside a goods and service tax (GST) registration cancellation order passed without stating the reason.

 The petitioner, Vijay Sales Enterprises challenged an order dated 02.12.2022 (the impugned order) passed by the respondent cancelling the petitioner’s GST registration with retrospective effect from 12.12.2019 (the date on which the registration was granted).

The petitioner had filed an application praying that the GST registration be cancelled with effect from 31.07.2022 as it had discontinued its business operation. Pursuant to the said application, the concerned officer issued a notice dated 03.08.2022 calling upon the petitioner to furnish certain documents, which the petitioner failed to do.

Thereafter, on 26.08.2022, the concerned officer passed an order rejecting the petitioner’s application for cancellation of the GST registration on the ground that the petitioner had not provided the relevant documents. 

The concerned officer issued a show cause notice dated 30.08.2022 (the Show Cause Notice) calling upon the petitioner to show cause as to why its registration should not be cancelled. The reason proposing to cancel the petitioner’s GST registration as set out in the Show Cause Notice notice reads as: “In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.”

The petitioner responded to the Show Cause Notice on 07.09.2022 denying the allegation that he was involved in any fraud or misstatement and suppression of facts. The petitioner also requested that the date of the hearing be postponed in order to enable him to attend the same.  The concerned officer passed the impugned order cancelling the petitioner’s GST registration with retrospective effect. 

It was evident that the impugned order had been passed in violation of the principles of natural justice. The Show Cause Notice did not specify the allegations pursuant to which the petitioner’s GST registration was proposed to be cancelled. It merely stated that “In case, Registration has been obtained by means of fraud, wilful misstatement and suppression of facts” and did not specify what the alleged fraud committed by the petitioner.

The Show Cause Notice was incapable of eliciting any meaningful response and the petitioner had denied that it was involved in any fraud or made any misstatement and suppressed any facts. 

A division bench of Justice Vibhu Bakhru and Justice Amit Mahajan found that the impugned order is also not informed by reason, it merely stated that the reply submitted by the petitioner was unsatisfactory.

Neither the Show Cause Notice nor the impugned order provides any clue as to why the petitioner’s GST registration was cancelled. Therefore the court set aside the Show Cause Notice and the impugned order.

To Read the full text of the Order CLICK HERE

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