GST Number cannot be cancelled on mere directions of another authority: HC:

GST Number cannot be cancelled on mere directions of another authority: HC The High Court of Delhi in the matter of KRITIKA AGARWAL Vs. UNION OF INDIA AND ORS. has held that GST Number cannot be cancelled on mere directions of another authority. The petitioner is, essentially, aggrieved by the cancellation of her GST Registration. The petitioner has also sought a refund of Rs.20,00,000 (Rupees twenty lacs only), which she claims was not deposited voluntarily against any demand, but under the pressure as exerted by the respondent authorities. However, the learned counsel for the petitioner states that the petitioner does not wish to seek any relief in regard to the deposit, aggregating to Rs.20,00,000/- as sought in the petition at this stage. The petitioner, however, seeks to reserve her rights for availing appropriate remedies in this regard at a later stage, if necessary. The petitioner states that she is engaged in the business of import and distribution of various types of chemicals, minerals and lubricant preparations falling under Chapters 27 and 34 of the schedule to the Customs Tariff Act, 1975. She claims that she has been carrying on the said business in the name and style of a sole proprietorship concern ‘Vivaan International’ since, prior to the rollout of the GST Regime on 01.07.2017 and was registered as a dealer under the Delhi Value Added Tax Act, 2004. The petitioner states that on 07.09.2022, the Anti Evasion Staff of Central Tax CGST, Delhi North Commissionerate visited and searched her premises. She claims that they also took possession of a few documents from her premises without drawing any panchnama. She claims that she was not present during the course of the search but her father-in-law (Sh. Ashok Kumar Jain), who was present at the premises at the material time, was compelled to tender a statement. He was also pressurized to deposit a sum of Rs.20,00,000/-. Initially, Sh. Ashok Kumar Jain resisted the said demand but the concerned officers continued to pressurise him. He succumbed to their pressure and in order to avoid any confrontation, deposited a sum of Rs.10,00,000/- (Rupees ten lacs only) through DRC-03 dated 07.09.2022, after consulting with the petitioner. As noted above, the order dated 28.10.2022 cancelling the GST registration had been passed solely on the directions issued by another authority. The only reason for cancellation of the GST Registration as disclosed in the Order-in-Original is that, the DC(AE), CGST, North Delhi had, by a letter dated 30.09.2022, directed cancellation of the registration of the taxpayer from the date of her GST Registration. It is material to note that the Order-in-Original dated 28.10.2022 also contained a tabular statement, which indicated that no tax was found payable. It is trite law that an authority that is vested with the power to take a decision is required to independently exercise the power and cannot do so on mere directions of another authority, without independently satisfying itself of the said decision. In the present case, it is apparent that the impugned Order-in-Original dated 28.10.2022 has been passed solely on the directions of another authority, without considering the petitioner’s reply to the Show Cause Notice dated 06.10.2022. Plainly, the impugned Order-in-Original dated 28.10.2022 cannot be sustained. It is also relevant to note that in terms of the Show Cause Notice dated 06.10.2022, the petitioner’s GST Registration was proposed to be cancelled solely for the reason that the petitioner had not responded to the summons issued under Section 70 of the CGST Act. The petitioner had explained that her accountant had visited the office and had sought an adjournment to prepare the documents. The Order-in-Original dated 28.10.2022 does not indicate that the said contention was considered. The cancellation of the GST Registration of a taxpayer has wide implications for the taxpayer and has the propensity of bringing the taxpayer’s business to a standstill. It could never be the intention of the legislature to exclude persons from carrying on legitimate business. Thus, the measure of cancellation of GST must be exercised with circumspection and only in cases, where it is necessary. In view of the above, we set aside the impugned Show Cause Notice dated 06.10.2022, the Order-in-Original dated 28.10.2022 and the Order-in-Appeal dated 30.05.2023. It is further clarified that in the event the respondent authority seeks to propose any adverse action against the petitioner, it would be open to issue a proper Show Cause Notice setting out the reasons for the proposed action. Needless to state, that any orders passed pursuant to the said Show Cause Notice would be informed by reasons. The petition is disposed of in the aforesaid terms. All pending applications are also disposed of. For Official Judgment Download PDF Given Below: