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Show Cause Notice issued for cancellation of GST registration without any proper reasoning is invalid

Bimal jain
Show Cause Notice for GST Cancellation Overturned Due to Lack of Evidence and Proper Reasoning Under GST Regulations. The Delhi High Court invalidated a Show Cause Notice (SCN) issued to a company by the Revenue Department for canceling its GST registration due to alleged fraudulent Input Tax Credit (ITC) claims. The court found the SCN lacked proper reasoning and detailed evidence of fraudulent activities, such as false invoices without actual supply of goods or services. Consequently, the court set aside the SCN, ruling it was insufficiently substantiated to justify the cancellation of the company's GST registration. (AI Summary)

The Hon’ble Delhi High Court in the case of M/S. KUNDAN IMPEX VERSUS PRINCIPAL COMMISSIONER OF DEPARTMENT OF TRADE AND TAXES, GOVERNMENT OF NCT OF DELHI - 2024 (1) TMI 434 - DELHI HIGH COURTdisposed of the writ petition by setting aside the order of cancellation as Show Cause Notice was devoid of any proper reasoning.

Facts:

Revenue Department (“the Respondent”) issued Show Cause Notice dated July 5, 2023 (“the Impugned SCN”) to Kundan Impex (“the Petitioner”) thereby suspending GST registration on the ground that the Petitioner had fraudulently availed ITC based on false invoices.

Aggrieved by the Impugned SCN, the Petitioner filed a writ petition before the Hon’ble Delhi High Court. 

Issue:

Whether the SCN issued for cancellation of GST registration devoid of any proper reasoning is valid?

Held:

The Hon’ble High Court of Delhi in M/S. KUNDAN IMPEX VERSUS PRINCIPAL COMMISSIONER OF DEPARTMENT OF TRADE AND TAXES, GOVERNMENT OF NCT OF DELHI - 2024 (1) TMI 434 - DELHI HIGH COURTheld as under:

  • Noted that, the Impugned SCN and letter issued against the Petitioner is bereft of details pertaining to entry or invoice issued without any supply of goods or services.
  • Opined that, the letter and the Impugned SCN issued are devoid of any proper reasoning as there is no clarity pertaining to availment of fraudulent ITC by the Petitioner, thereby writ petition is disposed of.
  • Held that, the Impugned SCN is set aside.

(Author can be reached at [email protected])

Goods and Services Tax - GST
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