Business carried from place other than declared principal place: HC order for GST restoration after physical verification [Read Order]

The Delhi High Court in the matter of M/s Roxy Enterprises Vs. Union of India ordered for GST restoration after physical verification of Business carried from place other than declared principal place.

Key Points of the Judgment:

The petitioner has filed the present petition, inter alia, impugning an Order-in-Appeal dated 29.09.2023 (hereafter the ‘impugned order’) whereby the petitioner’s appeal against an order cancelling its GST registration was rejected. This is the third round of litigation between the parties before this Court.

The proper officer has issued a Show Cause Notice dated 25.01.2023 (hereafter ‘the SCN’) proposing to cancel the petitioner’s GST registration for the reasons stated as: “Others”. The petitioner was directed to appear before the concerned officer on 31.01.2023. Additionally, the petitioner’s GST registration was suspended with effect from the date of the SCN, that is, with effect from 25.01.2023. Thereafter, by an order dated 14.02.2023, the petitioner’s GST registration was cancelled with retrospective effect from 09.11.2021. The reasons for cancelling the petitioner’s GST registration as stated in the said order are as under:

“1. The tax payer is non-existing as per Deputy Commissioner, Anti Evasion, CGST Delhi North Letter F.No.IV(Hqrs. Prev) GST-N/12/2800/Gr2/2022/19846 dated 04.11.2022. Cancellation of Registration is initiated as per the Section 29(2) of CGST Act, 2017 read with Rule 21 of CG&ST Rules, 2017 read with Rule 21 of CG&ST Rules, 2017.”

The petitioner states that pursuant to the said order, he appeared before the concerned officer and provided the necessary documents.

Since the key question was whether the petitioner was carrying on its business from the declared principal place of business, a verification was conducted on 06.06.2023. The visiting team found that the petitioner was standing outside his premises and he intimated the visiting team that he has since shifted its principal place of business. The petitioner states that he was carrying on his business from House No. 316, Old Plot No. 29, Ground Floor, Shop No. PVT-3, Kh. No. 842, Street No. 26, Onkar Nagar, Tri Nagar, North West Delhi, Delhi110035 prior to 31.05.2022, and had shifted his place of business to premises described as 336/26, Onkar Nagar-B, Tri Nagar, Delhi110035 thereafter. According to the petitioner, the said premises is also located in the vicinity of his earlier occupied premises.

There is a controversy whether the petitioner had informed the visiting team as to his then current address. Whereas, the petitioner claims that he has informed the visiting team regarding his new address, the same is disputed by the respondents as there is nothing on record to substantiate the same.

In view of the above, the proper officer passed an order dated 06.06.2023 cancelling the petitioner’s GST registration on the ground that the petitioner was not carrying on business from his declared principal place of business.

The petitioner’s appeal was heard by the Appellate Authority and the same was rejected by the impugned order. The petitioner has filed the present petition aggrieved by the said order.

Although, the petitioner has an efficacious remedy of filing a statutory appeal before the learned Tribunal, the petitioner is unable to avail of the said remedy as the Tribunal has not been constituted. In the given circumstances, this Court considers it apposite to entertain the present petition.

Before the Appellate Authority, the petitioner had filed a Rent Agreement in respect of its current place of business, which reflects that the petitioner had commenced paying rent for the said premises with effect from 31.05.2023. The Appellate Authority considered the same and it is apparent from the impugned order that the Appellate Authority accepted that the petitioner had shifted to a new premises with effect from 31.05.2023. Notwithstanding the same, the Appellate Authority rejected the petitioner’s appeal on the ground that the petitioner could not substantiate that he was continuing to function from the earlier place of business till 31.05.2023.

The petitioner produced Rent Agreement dated 15.11.2021 in respect of its earlier place of business. The said Rent Agreement was for a period of eleven months and therefore the Appellate Authority had reasoned that the petitioner would have continued to operate from the said premises till 14.10.2022, however, did not accept that the petitioner continued to occupy the said premises thereafter. Thus, according to the Appellate Authority there was a gap between 14.10.2022 (the date on which the earlier Rent Agreement expired) and 31.05.2023 (the date on which the Rent Agreement for the new premises had commenced). According to the petitioner, although its Rent Agreement for the earlier premises expired on 14.10.2022, the petitioner had continued to occupy the same till he shifted to the current place of business in the end of May, 2023.

It is apparent that no physical verification had been carried of the petitioner’s earlier premises during the period 14.10.2022 to 31.05.2023. Any such verification was required to be carried in accordance with the Rules, which also mandates the petitioner to be issued a notice for the same.

“Rule 25. Physical verification of business premises in certain cases. – Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG30 on the common portal within a period of fifteen working days following the date of such verification.”

Unable to accept that the Appellate Authority could have taken a definite view of the petitioner being non-functional from its declared place of business prior to 31.05.2023. It is also apparent that there is no contest that the petitioner had furnished evidence of his leasing another premises with effect from 31.05.2023. Undisputedly, the petitioner has not been unable to upload his application for change of its earlier place of business as the petitioner’s GST registration stood suspended with effect from 25.01.2023.

Order:

(a) The concerned official of the respondents shall visit the petitioner’s current premises (336/26, Onkar Nagar-B, Tri Nagar, Delhi-110035), within a period of one week from date, to verify whether the petitioner is occupying the same.

(b) In the event the petitioner is found occupying and operating from the aforesaid premises, the petitioner’s GST registration shall be restored immediately thereafter.

(c) The petitioner shall file the requisite application regarding shifting to his new place of business. The concerned official shall verify whether the petitioner has filed the requisite returns as well as the application for updating its current place of business on the record.

(d) The respondents shall, thereafter, update the records of the petitioner.

It is clarified that nothing stated in this order shall preclude the respondents from initiating any proceedings or pursuing the same in case it is found that the petitioner is in default of any statutory provisions.

The petition is disposed of in the aforesaid terms.

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