Delhi High Court Quashes Retrospective GST Cancellation Due to Vague Show Cause Notice

The Delhi High Court set aside a retrospective cancellation of GST registration due to the vague show-cause notice, which did not mention the specific clauses.

The petitioner company, Glo Interio, obtained GST registration on 5th June, 2019. After stopping the business, the company applied for voluntary cancellation under section 29 of the GST Act. However, the GST department issued a show cause notice to the company alleging that it has not paid tax, interest or penalty to the government for more than 3 months.

Since the show cause notice remained unanswered by the petitioner company, the GST department issued an order cancelling the GST registration of the company from the date of its registration, i.e., 5 June 2019.

This order was challenged by the company before the Appellate Authority, but the company’s appeal was dismissed for being time-barred. Therefore, the company approached the Delhi High Court.

The petitioner argued that the show cause notice was vague, as it did not mention the specific clause specifying the quantum and the period for which the due GST amount was not deposited. Additionally, it was alleged that the SCN did not specify whether the cancellation is with retrospective effect.

The court noted that a vague show-cause notice does not give a proper and complete opportunity for a hearing to the petitioner.

The Court held that cancellation of GST registration with retrospective effect based on a vague SCN is unsustainable in law. Therefore, the Court quashed the GST cancellation order dated and also set aside the appellate order rejecting the appeal.

However, due to the delayed filing of the Appellate proceedings, the Court imposed a cost of Rs 10,000 on the petitioner, payable to the Delhi High Court Bar Association.

The Court allowed the GST authorities to issue a new, modified, detailed Show Cause Notice within four weeks and directed the petitioner to provide its email address, contact number, and postal address.