No Notice issued regarding Retrospective  Cancellation of GST Registration: Delhi HC sets aside Order [Read Order]

The Delhi High Court set aside the order cancelling Goods and Service Tax ( GST ) registration as the department failed to issue a notice regarding retrospective Cancellation. The bench observed that when the petitioner did not submit a reply, the proper officer recorded that the reply of the petitioner had been considered and at the stage when the petitioner did submit a reply, the Proper Officer recorded that no reply was filed.

Rane Brake Lining Limited, the petitioner challenged the order whereby the GST registration of the petitioner has been cancelled. Petitioner also impugned the order whereby the application of the petitioner seeking revocation has also been dismissed. 

The petitioner carries on the business of manufacturing safety-critical products for automobiles and locomotives across India and was registered under the Central Goods and Services Act, of 2017. 

A Show Cause Notice was issued to the petitioner on 27.12.2022 seeking to cancel the GST registration of the petitioner. The ground mentioned in the Show Cause Notice is “others”.  As per the case of the petitioner, the petitioner never received the Show Cause Notice and accordingly did not respond thereto. 

The Show Cause Notice requires the petitioner to appear before the undersigned i.e., the signatory of the notice.  However, there is no name or designation of the officer mentioned who has issued the Show Cause Notice. The digital signatures on the Show Cause Notice also show “DS Goods and Services Tax Network 07”.

The impugned order has been passed cancelling the registration of the petitioner.  The order refers to a reply from the petitioner. As per the case of the petitioner, the petitioner never received the notice nor submitted any reply thereto.  The order further cancels the registration on the ground that physical verification was conducted on 15.12.2022 and no such firm was found present at the registered office. The order further cancels the registration retrospectively w.e.f. 02.07.2017.

Petitioner was never intimated as to the real ground for cancellation. Cancellation order also suffers from infirmity in as much as the officer seems to have considered a reply of the petitioner when no such reply has been filed.  Further, the petitioner was never put to notice that the registration is liable to be cancelled retrospectively.

In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically.

Petitioner thereafter filed an application seeking revocation. Under the application for seeking revocation, a Show Cause Notice dated 04.01.2024 was issued to the petitioner, seeking to reject the revocation application. Said Show Cause Notice also required the petitioner to appear once again before the undersigned i.e., the signatory of the notice.

The division bench noted that neither the name nor the designation of the officer issuing the notice was mentioned. The notice is digitally signed and the endorsement on the digital signature is “DS Goods and Services Network-07”.  

It was found that the Show Cause Notice is also defective. The Petitioner thereafter filed a reply on 08.01.2024 to the said Show Cause Notice.  Under the Show Cause Notice, the order dated 16.01.2024 has been passed which states that the petitioner has not submitted a reply.

Justice Sanjeev Sachdeva And Justice Ravinder Dudeja noted that there appears to be complete non-application of mind. At the stage when the petitioner did not submit a reply, the proper officer has recorded that the reply of the petitioner has been considered and at the stage when the petitioner did submit a reply, the Proper Officer has recorded that no reply was filed.

The court set aside the Show Cause Notices and the consequent order. The GST registration of the petitioner is restored. 

To Read the full text of the Order CLICK HERE

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