Mere Bald Statement that Registration was Obtained by Fraud, Wilful Misstatement or Suppression of Facts not Sufficient for Cancellation of GST Registration: Delhi HC [Read Order]

In a recent decision the Delhi High Court observed that mere bald statement that registration was obtained by fraud, wilful misstatement or suppression of facts not sufficient for cancellation of GST Registration.

The petitioner, M/s Cuthbert Oceans LLP, has filed the present petition, inter alia, impugning the show-cause notice calling upon the petitioner to show cause as to why its registration should not be cancelled, as well as the order passed pursuant to the impugned show-cause notice. The respondent issued the impugned show-cause notice proposing to cancel the petitioner’s registration for the following reasons: “Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts”.

Apart from the aforesaid reason, the impugned show-cause notice did not disclose any other reason or particulars for proposing the adverse action against the petitioner. The petitioner was called upon to furnish a reply to the impugned show-cause within a period of seven days from the date of service of the impugned show-cause notice; it further directed the petitioner to appear before the respondent on 11.05.2023 at 01:00 PM.

The petitioner filed a response to the said show-cause notice albeit belatedly – after the respondent had passed the impugned order cancelling the petitioner’s GST registration.

A Division Bench of Justices Vibhu Bakhru and Amit Mahajan observed that “As is apparent from the above, the impugned show-cause notice was bereft of any particulars and it is difficult to accept that the said show-cause notice could elicit any meaningful response. It is trite law that a show-cause notice must set out the allegation in order to enable the noticee to respond to the same.”

The petitioner’s response to the impugned show-cause notice (although sent belatedly) indicates that the petitioner has referred to the transactions carried out by him and had quizzed the respondent; “So what is fraud in this transaction?”. This question resonates with us as well, the Bench commented.

“Merely making the bald statement that the registration was obtained by fraud, willful misstatement or suppression of facts without alluding to any such misstatement or the allegedly suppressed facts, provides no clue to the noticee as to the allegation against him. Although the impugned order is an appealable order, but considering that this is a clear case of violation of the principles of natural justice, we have considered it apposite to entertain the present petition” the Court added.

To Read the full text of the Order CLICK HERE

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