GST Cancellation Order without giving valid grounds of cancellation Invalid

The Delhi High Court in the matter of M/S MY TRADING OVERSEAS Vs. COMMISSIONER DELHI GOODS AND SERVICE TAX Ordered to cancellation of GST without giving valid grounds for cancellation is invalid.

The Official Judgment Stated:

The petitioner has filed the present petition impugning an order dated 22.11.2023 (hereafter ‘the impugned order’) whereby the petitioner’s GST registration was cancelled. The impugned order was passed pursuant to a show cause notice dated 05.04.2022 (hereafter ‘the impugned SCN’) whereby the petitioner’s GST registration was proposed to be canceled for the following reasons:

“1 In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.”

The petitioner was directed to file a reply to the impugned SCN within a period of seven working days and to appear before the concerned officer on 07.04.2022 at 12.00 pm. Additionally, the petitioner’s GST registration was suspended with effect from the said date, that is, 05.04.2022.

The petitioner responded to the impugned SCN on 06.04.2022, inter alia, stating that the registration was obtained by uploading all required documents, however, due to size restriction, the documents uploaded were blurred. The petitioner further stated that it was ready to upload all the documents once again, if required and requested the concerned officer to restore its GST registration, which was suspended.

This Court has, in a number of decisions, pointed out that such show cause notices, which do not set out the reason for proposing to cancel the taxpayer’s GST registration and are incapable of eliciting any meaningful response, are liable to be set aside. It is settled law that the purpose of the show cause notice is to enable the notice to respond to the allegations, which in turn enables the concerned authority to take an informed decision.

In view of the above, the impugned order as well as the impugned SCN are set aside. The respondent is directed to forthwith restore the petitioner’s GST registration. It is clarified that this would not preclude the concerned authorities from initiating fresh proceedings albeit in accordance with the law.

The petition is disposed of in the aforesaid terms. Pending application is also disposed of.

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