SCN Proposing GST Registration Cancellation Fails to mention name of Officer to be appeared before: Delhi HC sets aside Order [Read Order]

The Delhi High Court set aside the order cancelling Goods and Service Tax ( GST ) registration as the Show Cause notice ( SCN ) proposing the cancellation fails to mention the name of the officer to be appeared before.

The petitioner, Ganesh Sales Corporation challenged the order whereby the GST registration of the petitioner was cancelled retrospectively with effect from 05.05.2018. Petitioner also impugns Show Cause Notice by which petitioner was called upon to show cause as to why the registration be not cancelled for the following reason, “Section 29(2)(e)- registration obtained using fraud, wilful misstatement or suppression of facts”. 

The petitioner is engaged in the business of the trading of ferrous and non-ferrous metals and possesses GST registration.  Show Cause Notice was issued to the petitioner seeking to cancel its registration on the grounds “Section 29(2)(e)- registration obtained using fraud, wilful misstatement or suppression of facts”. Said Show Cause Notice required the petitioner to appear on 11.01.2024 at 2:05 PM before the undersigned i.e. authority issuing the notice. However, the said Notice does not give the name of the officer or the place where the petitioner has to appear. Further, the digital signatures in the Show Cause Notice merely mention “digitally signed by DS GOODS AND SERVICES TAX NETWORK 07.”

Further, the said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Thus, the petitioner had no opportunity to even object to the retrospective cancellation of the registration. Thereafter, the impugned order passed on the said Show Cause Notice also does not give reasons for cancellation. It merely states “a reference to show cause notice issued dated 05.01.2024” and subsequently states “effective date of cancellation of your registration is 05.05.2018”.

It was important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period.

A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja viewed that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. 

The petitioner shall make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017.  It was clarified that Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm under law including retrospective cancellation of the GST registration.

Mr Jitin Singhal and Mr Pravesh Bahuguna appeared for the petitioner and Mr N.K. Aggarwal, Mr. Arnav Kumar, SSC with Ms. Aranya Sahay appeared for the respondent.

To Read the full text of the Order CLICK HERE

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