SCN proposing GST Registration Cancellation fails to mention Cogent Reason: Delhi HC sets aside Notice [Read Order]

In a recent judgement, the Delhi High Court set aside the show cause notice ( SCN ) and the Goods and Service Tax ( GST ) registration cancellation order as the same failed to mention a cogent reason for cancellation. The bench observed that neither the show cause notice nor the order spell out the reasons for cancellation.

The Petitioner was represented by Mr Vineet Bhatia, Mr Aamnaya J. Mishra, Mr Keshav Garg and Mr Bipin Punia, Advocates. The Respondents were represented by Ms. Shaguftha, Advocate for Mr. Rajiv Aggarwal, Senior Standing Counsel.

The Petitioner, M/S Shree Balaji Industries challenged the order whereby the GST registration of the petitioner was cancelled retrospectively with effect from 08.07.2017. Petitioner also impugned the  Show Cause Notice.  

The Show Cause Notice was issued on the petitioner to show cause as to why the registration was not cancelled for the reason that “Letter received. 802 dt27/07/2020 from JC ( AE )Noida, wrong ITC availment from M/s Jagdamba Enterprises”

The Petitioner was engaged in the business of manufacturing labels, badges and similar articles of textile material and possessed GST registration. Show cause notice was issued to the petitioner seeking cancellation of GST registration. The notice does not specify any cogent reason.

Further, the order passed on the show cause notice does not give any reasons for cancellation of the registration. It merely states “whereas no reply to notice show cause has been submitted”. However, the said order in itself is contradictory, the order states “reference to your reply dated 06.10.2021 in response to the notice to show cause dated 31.08.2021” and the reason stated for cancellation is “whereas no reply to notice to show cause has been submitted”. The order further states that the effective date of cancellation of registration is 08.07.2017 i.e., a retrospective date.

Neither the show cause notice nor the order spell out the reasons for cancellation. It was found that the petitioner had no opportunity to even object to the retrospective cancellation of the registration.

The court noticed that the show cause notice directed the petitioner to appear for a personal hearing on an appointed date and time whereas no date and time was mentioned in the said show cause notice. 

While allowing the petition, the division bench comprising  Justice Sanjeev Sachdeva and Justice Ravinder Dudeja set aside the impugned show cause notice and order of cancellation. The GST registration of the petitioner is restored. The petitioner shall comply with Rule 23 of the Central Goods and Service Tax Rules, 2017.

To Read the full text of the Order CLICK HERE

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