The Delhi High Court has set aside an assessment order, citing the non-mentioning of retrospective Goods and Service Tax (GST) cancellation in the Show Cause Notice (SCN).
The petitioner, who was engaged in the transport business, faced the cancellation of their Goods and Services Tax (GST) registration. A show cause notice dated 08.11.2022 was issued, prompting the petitioner to respond as to why the registration should not have been canceled under Section 39 of the Central Goods and Services Tax Act, 2017. The notice vaguely mentioned a “failure to furnish returns for a continuous period of six months,” compelling the petitioner to appear without specifying the officer’s name or location.
The court observed that the order cited the reason as “failure to file returns and pay all dues, if any,” setting the effective date for cancellation as 31.03.2022, retroactively. The court observed that neither the show cause notice nor the order provided clear reasons for the cancellation.
The two member bench comprising Justice Sanjiv Sach Deva and Justice Ravindar Dudeja concluded that deeming the proceedings vitiated due to lack of reason and clarity, set aside the impugned order and the subsequent order in appeal dated 24.08.2023. The petitioner’s GST registration was reinstated.
The court emphasized that neither the show cause notice nor the order qualified as a valid cancellation, and relegating the petitioner to an appeal served no purpose.
The court highlighted Section 29(2) of the Central Goods and Services Tax Act, 2017, empowering the proper officer to cancel the registration from a retrospective date based on specific circumstances. The court emphasized that such cancellations should not be mechanical and subjective, requiring objective criteria. The failure to furnish returns for a certain period should not automatically warrant retrospective cancellation.
Assessment order set aside and the subsequent order in appeal dated 24.08.2023. The petitioner’s GST registration was reinstated.
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