The Delhi High Court has set aside the cancellation of Olive Traders’ GST registration, emphasising the necessity of a fair hearing and proper opportunity to respond to a Show Cause Notice (SCN). The decision highlights critical procedural lapses by the GST authorities.
The writ petition saw Olive Traders challenging the cancellation order dated May 4, 2023, issued by the respondent, the Commissioner of Central Goods and Services Tax (CGST). The cancellation was based on an SCN dated April 17, 2023.
The petitioner, represented by Mr. Shivender Kumar Sharma and Mr. Urooj Chaudhary contended that the SCN was issued solely on the basis of a communication from another department, without the Proper Officer being independently satisfied. They argued that this was against the established legal principles, citing various precedents, including judgments from the Delhi High Court.
The respondent revenue, the Commissioner, CGST and another, represented by Mr. Shashank Sharma stated that the SCN was issued because a letter sent to the petitioner was returned undelivered with the remark “No such firm found”. This led the GST authorities to question the existence of Olive Traders at the registered address.
The court noted that Olive Traders neither responded to the SCN nor appeared before the Proper Officer on the designated date.
Despite the petitioner’s claim of having filed a reply on April 27, 2023, the court found no evidence supporting this assertion. The reference to such a reply in the impugned order was attributed to an erroneous template, rather than an actual submission from Olive Traders. This procedural ambiguity significantly undermined the cancellation process.
Moreover, after the cancellation, Olive Traders sought condonation of delay in filing for revocation of the cancellation. The Proper Officer, not satisfied with the reasons for the delay, issued another SCN on January 16, 2024, which also went unresponded. Subsequently, the application for condonation was rejected on January 30, 2024.
The division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta noted that Olive Traders’ case had not been considered on its merits due to these procedural deficiencies. Recognising the need for a fair process, the court set aside the cancellation order and allowed Olive Traders another opportunity to respond to the SCN.
The petitioner is directed to submit their response and all supporting documents within four weeks. The Proper Officer is directed to reassess the case and pass a well-informed decision after providing Olive Traders with a fair hearing.
The court clarified that their decision does not pre-empt the outcome regarding the legitimacy of the GST registration but ensures procedural justice. All contentions from both parties remain reserved, the court noted.
This decision highlights the legal requirement that taxpayers be given a fair chance to present their case, which is foundational to maintaining trust and compliance in the tax system.
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