Natural Justice Violation: Delhi HC allows Second Opportunity to Contest GST Registration Cancellation Order [Read Order]
The SCN did not detail any specific allegations of fraud, misstatements, or facts that had been suppressed by the petitioner.
Delhi High Court – Delhi HC – Natural Justice – Natural Justice Violation – GST Registration – GST Registration Cancellation – Cancellation Order – TAXSCAN
Delhi High Court – Delhi HC – Natural Justice – Natural Justice Violation – GST Registration – GST Registration Cancellation – Cancellation Order – TAXSCAN
In a recent ruling, the Delhi High Court allowed M/S SS Enterprises a second opportunity to contest the cancellation of its GST registration, recognizing a violation of the principles of natural justice. The petitioner, SS Enterprises, challenged both the Show Cause Notice (SCN) issued on March 5, 2024, and the subsequent cancellation order dated April 2, 2024.
The SCN cited the general provision under Section 29(2)(e) of the CGST Act, which pertains to cancellation of GST registration on grounds of fraud or suppression of facts but did not detail any specific allegations of fraud, misstatements, or facts that had been suppressed by the petitioner.
The GST registration of the petitioner was cancelled without adequate reasons being clearly specified in the SCN, a lapse which was pointed out by the Court.
Further complications arose when SS Enterprises applied for revocation of the cancellation order, which resulted in another SCN on April 19, 2024. This notice raised two primary concerns: the vague/incomplete nature of the business's principal place of operation, and the unusually high turnover of ₹24.19 crores within two months, entirely paid through Input Tax Credit (ITC), prompting questions about the legitimacy of the transactions.
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Although SS Enterprises failed to respond to the second SCN and missed an appearance before the authorities, the Court decided not to reinstate the cancelled registration outright.
The bench of Justice Vibhu Bakhru and Justice Sachin Datta noted that, “ the learned counsel for the petitioner has confined the present petition to seeking an opportunity to respond to the said allegations.”
It was thus stated, “notwithstanding that the impugned cancellation order is liable to be set aside on falling foul of the principles of natural justice, we do not consider it apposite to set aside that order. But we set aside the order dated 01.05.2024 whereby the petitioner’s application for revocation of the impugned cancellation order was rejected. This is to enable the petitioner to respond to the allegations in the SCN dated 19.04.2024 on the basis of which the impugned cancellation order was sustained.”
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However, it did annul the rejection order dated May 1, 2024, for revocation of the cancellation, granting the petitioner an additional time of two weeks to respond to the allegations raised in the SCN dated April 19, 2024, for ensuring that due process is followed.
To Read the full text of the Order CLICK HERE
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