GST Registration restored to enable petitioner to explain GSTR-3B and GSTR-2B mismatch [Read Order]

The Delhi High Court in the matter of CUTHBERT WINNER LLP Vs. THE ASSISTANT COMMISSIONER OF CGST has held that GST Registration be restored to enable the petitioner to explain the GSTR-3B and GSTR-2B mismatch.

The Text of the Order is as follows:

The petitioner is essentially aggrieved by the cancellation of its GST registration. The petitioner’s registration was cancelled in terms of an order dated 25.07.2023, which was passed pursuant to a Show Cause Notice (‘SCN’ in short) dated 02.06.2023.

In terms of the SCN dated 02.06.2023, the Proper Officer had proposed to cancel the petitioner’s registration on the ground that it was found to be non-existent at its registered address. The petitioner was called upon to respond to the said notice within a period of seven working days, and also appear before the concerned officer on 09.06.2023. Additionally, the petitioner’s GST registration was suspended with effect from the date of SCN, that is, with effect from 02.06.2023.

It is material to note that prior to the issuance of SCN, the petitioner had made an application dated 08.04.2023 to reflect the change of its principal place of business in the GST records. Pursuant to the said application, the concerned officer had issued a notice dated 20.04.2023, demanding proof of the new address. It had thereafter, proceeded to reject the said application by an order dated 01.05.2023 as the query remained unfulfilled.

It is apparent from communication issued by the respondent that certain officers of the Directorate of Revenue Intelligence (‘DRI’) had visited the petitioner’s previous principal place of business on 25.04.2023, and had not found the petitioner present at the said premises. It appears that the SCN dated 02.06.2023 issued thereafter, proposing to cancel the petitioner’s GST registration, was triggered by the information received from the officials of the DRI.

According to the petitioner, since it had already changed the principal place of business on 08.04.2023, it was not functioning from the said premises that were visited by the officials on 25.04.2023. The order dated 25.07.2023 cancelling the petitioner’s GST registration is founded on the premise that the petitioner was non-existent at its principal place of business.

The petitioner responded to the SCN dated 02.08.2023 by furnishing further information regarding the change of its principal place of business. Notwithstanding the same, the petitioner’s application for revocation of the cancellation order dated 25.11.2023 has not been decided. Instead, the Proper Officer has issued a further communication dated 04.09.2023 seeking reconciliation of the difference between the Input Tax Credit claimed under the return (GSTR-3B) and the Input Tax Credit as reflected in the return (GSTR-2A) for the financial years 2020-2021 to 2023-2024.

As apparent from the above, discrepancy in the Input Tax Credit claimed by the petitioner was not the ground on which the petitioner’s GST registration was cancelled. The petitioner claims that it is handicapped in responding to the communication dated 04.09.2003, and reconciling the Input Tax Credit Claim for more than three financial years, in absence of full access to its GST Portal. This access is unavailable as the petitioner’s GST registration has been cancelled with retrospective effect.

In view of above, we consider it apposite to direct that the concerned officer shall decide the petitioner’s application for revocation of the cancellation order after examining all aspects as to whether the petitioner was existent at its principal place of business at the material time.

We request the Proper Officer to conclude proceedings in this regard as expeditiously as possible, and in any event within a period of six weeks from the date. This would necessarily entail examination in regard to the period prior to the petitioner applying for a change in its registered place of business as well. If the Proper Officer finds that the petitioner was existent at its principal place of business prior to the petitioner applying for change of the same, the petitioner’s GST registration would be restored forthwith without any delay.

In addition, we also consider it apposite to direct the respondents to supply copies of all returns and information as filed by the petitioner to enable the petitioner to respond to the communication dated 04.09.2023.

The writ petition is allowed in the aforesaid terms.

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