The Delhi High Court recently quashed an order cancelling the Goods and Services Tax (GST) registration of a business observing that the allegation of no actual business being conducted at the concerned premises contradicts the findings of the GST Inspector in the physical verification report.
The decision was given in a Writ Petition filed by Rashid Proprietor Of MS Enterprises after receiving a Show-Cause Notice (SCN) dated 24th November, 2023 alleging that he was not conducting business from the declared place and was involved in passing on inadmissible Input Tax Credit (ITC) without actual supply of goods and services. A prior SCN had been served upon the Petitioner on 18th August 2023 raising concerns about suspicious purchases, but was soon dropped after the petitioner issued their response to the Department on 21st August 2023.
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The impugned SCN raised grounds that the Petitioner does not conduct any business from their declared place of business and that the concerned proprietorship firm was involved in the passing on of inadmissible ITC without conducting the actual supply of goods and services.
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Despite the Petitioner having issued a response claiming that no illicit activity had been conducted by them, the Department proceeded to cancel the GST registration of the Petitioner and even rejected the Petitioner’s application seeking to revoke the cancellation.
Represented by Dipak Raj, Kuldeep Mishra, Garima Kumar, Deep Raj and Ayushman, the Petitioner contended that the impugned SCN lacked specific details justifying cancellation and that no opportunity for hearing was provided prior to the cancellation.
Meanwhile, Piyush Beriwal, Sandip Munian and Jyotsna Vyas appearing for the Government and Revenue maintained that no hearing opportunity was provided to the Petitioner since the Petitioner failed to reply to the SC.
A Division Bench of Justice Prathiba M. Singh and Dharmesh Sharma observed that the impugned SCN was completely cryptic in nature and adduced two contradicting grounds,i.e, no business was conducted at the business premises, which conflicted with the physical verification report provided by the GST inspector which claimed that the firm was functional and dealt in scrap material.
The Bench proceeded to set aside the Order of Cancellation of GST Registration while directing the Revenue to give a reasonable opportunity of hearing to the Petitioner.
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