In a recent ruling, a division bench of the Delhi High Court has quashed an order cancelling GST registration observing that the GST department has not allowed an opportunity to present during the inspection and not uploaded photographs during the inspection.
An inspection conducted on the premises of the assessee, M/s KPM Enterprises triggered the impugned show-cause notice and suspension of the petitioner’s registration. As per the impugned show-cause notice, the petitioner was called upon to show-cause as to why its GST registration should not be cancelled, for the reason that “taxpayer found non-functioning/not existing at the principal place of business”. Thereafter, the GST department issued the impugned order cancelling the registration, although no demand has been raised.
The assessee contended before the High Court that the alleged inspection, is in violation of the Rule 25 of the 2017 Rules as the petitioner was not afforded any opportunity to be present at the site. Further, the department has also not uploaded any photographs as required.
Mr Satyakam, the counsel for the respondents submitted that even though Rule 25 of the 2017 Rules was not strictly followed the petitioner can be afforded an opportunity to contest the same. The impugned show-cause notice was issued to afford the petitioner an opportunity to present its case as to why the registration should not be cancelled. He submitted that all contentions including that Rule 25 of the 2017 Rules was not followed, would be available to the petitioner.
Allowing the writ petition, Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav observed that “this Court is unable to accept that the impugned show-cause notice can be sustained, considering that it is clear that it is premised on an alleged inspection that was carried contrary to the 2017 Rules. This court had also enquired whether any photographs were taken at the time of the inspection as required; Mr Satyakam has, after obtaining instructions, responded in the negative. In view of the above, the petition is allowed and the impugned show-cause notice as well as the impugned order is set aside.”
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