Adjudicating Authority Arbitrarily Cancels GST Registration of boAt Parent Company: Delhi HC Imposes 25k Cost on Officer [Read Order]

In a recent ruling, the Delhi High Court held that the Adjudicating Authority had arbitrarily cancelled the GST registration of Imagine Marketing Limited, the parent company of boAt, and imposed a cost of Rs. 25,000 on the concerned officer.

Imagine Marketing Limited (the petitioner) filed a writ petition challenging the GST authorities’ actions after its registration was cancelled through an order dated 26 November 2024. The company had been operating from leased premises at Hauz Khas, New Delhi, and had regularly entered into lease agreements with the owners since 2019.

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In October 2024, it received a show cause notice stating only “non-existent” as the basis for cancelling the registration, without giving any facts or explanation. The notice allowed thirty days to reply, and the company submitted a detailed response on 28 October 2024, enclosing lease documents and recent GST returns.

The petitioner’s counsel argued that the reply was filed well within time and contained all relevant documents, yet the cancellation order merely stated that the reply was “not considerable,” without giving any reason.

The order also claimed that during physical verification, the company was found existent at the premises, but still proceeded to cancel the registration with effect from the date of the show cause notice.

The company then applied for revocation of cancellation, but the subsequent show cause notice dated 26 December 2024 again stated that required documents had not been filed. A detailed reply with documents was submitted on 6 January 2025, but the revocation request was rejected on 8 January 2025 without considering the material placed on record.

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The department’s counsel argued before the High Court that the petitioner had not submitted all documents sought in the revocation notice and that the orders were passed as per the information available with the authorities.

The petitioner challenged this position by pointing out that the appeal filed before the Appellate Authority included all screenshots, replies, and documents, yet the appeal was dismissed on the ground that only a lease deed and an electricity bill had been furnished.

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The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain observed that the Adjudicating Authority had acted in a cavalier and mechanical manner and that the orders showed no application of mind.

The court explained that the authority failed to consider the replies and documents filed by the taxpayer, passed templated orders, and ignored the fact that the GST portal already contains the taxpayer’s returns and filings. The Bench pointed out that the Appellate Authority’s conclusion regarding non-submission of documents was incorrect because the appeal index showed that all relevant material had been filed.

The court held that the cancellation order, the rejection of the revocation request, and the appellate order all lacked reasoning and failed to meet the basic standards of fairness required in adjudication. The court set aside all three orders and restored the GST registration of Imagine Marketing Limited.

The show cause notice dated 15 October 2024 was directed to be adjudicated afresh after granting a proper personal hearing and considering the replies already submitted. The court further imposed a cost of Rs. 25,000 on the department, to be recovered from the Superintendent who handled the matter. The writ petition was allowed.

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