Taxpayer Fails to Respond to SCN and Had No Business at Registered Address: Calcutta HC Upholds GST Registration Cancellation [Read Order]

In a recent ruling, the Calcutta High Court upheld the cancellation of a taxpayer’s GST registration after the assessee failed to respond to a Show Cause Notice (SCN) and was found to have no business presence at the registered address.

The petitioner, Md. Firoz had obtained GST registration for his business under the name "Domain Enterprises" at Howrah. A field investigation by the Bureau of Investigation, South Bengal Headquarters, revealed that the registered premises were primarily a residential building, with only one commercial room that was locked and had no signage indicating business activity.

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Based on these findings, the GST authorities issued an SCN on 19.07.2023, proposing the cancellation of the petitioner’s registration on grounds of misrepresentation and suppression of material facts. Despite being given the opportunity to respond, the petitioner did not reply to the SCN. On 07.08.2023, the GST registration was canceled.

The petitioner later appealed the decision before the appellate authority, which also upheld the cancellation on 05.09.2024, stating that there was no evidence to prove that the petitioner was conducting business from the registered address.

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During the hearing, the petitioner’s counsel argued that the tax authorities failed to consider important documents, including a leave and license agreement and electricity bills in the name of his licensor. The petitioner’s counsel argued that the petitioner was not required to prove the ownership of the premises, only his right to conduct business there, and also claimed to have shifted his business to a new address before the cancellation.

The Department’s counsel countered that the petitioner’s failure to respond to the SCN, coupled with the findings of the field investigation, justified the cancellation. They explained that there was no proof of actual business operations at the registered location, no evidence of rent payments, and no response from the petitioner even during the appellate proceedings.

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Justice Raja Basu Chowdhury observed that the petitioner had not challenged the findings of the Bureau of Investigation, nor had he provided any substantive proof of ongoing business activities at the address in question. The court held that the Proper Officer’s decision to cancel the registration was based on a plausible inference from the investigation report and was not arbitrary or perverse.

The court ruled that no interference was warranted as the petitioner had failed to establish his case and had not availed the opportunities given to him during the proceedings. The cancellation of GST registration was upheld.

To Read the full text of the Order CLICK HERE

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