2022 (8) TMI 689 - HC - GST

Revenue authorities must restore cancelled GST registration after failing to comply with appellate authority's restoration order under Rule 25

Aditya Narayan Ojha (Amit Associates) Versus Principal Commissioner, CGST, Delhi North & Anr.

Delhi HC directed revenue authorities to restore petitioner's cancelled GST registration after they failed to comply with first appellate authority's ... Cancellation of petitioner’s GST registration - Direction of the first appellate authority to restore the registration not complied with - requirement of physical verification of premises - HELD THAT:- It cannot but be accepted that under Rule 25 of the Central Goods and Services Tax Rules, 2017, before carrying out physical inspection, the respondents/revenue are required to serve a notice on the concerned person/entity. However, as noticed above, all this did not form part of the order dated 10.10.2021 - Furthermore, the first appellate authority has given a rationale for revoking the order cancelling the petitioner’s GST registration - there are no good reason not to direct the respondents/revenue to comply with the OIA. The respondents/revenue, at this juncture, have no other alternative, but to comply with the order of the first appellate authority, given the fact that they have taken no steps to approach this Court, despite liberty having been given, in that behalf, on 02.06.2022 - the writ petition is disposed of with a direction that the respondents/revenue shall restore the petitioner’s GST registration. Issues: Compliance with Order-in-Appeal, Revocation of GST Registration, Failure to Respond to Show-Cause Notice, Physical Inspection NoticeCompliance with Order-in-Appeal:The petitioner approached the court alleging non-compliance with the Order-in-Appeal (OIA) dated 07.01.2022, where the appellate authority had revoked the order cancelling the petitioner's GST registration. The petitioner contended that despite the OIA, the respondents/revenue had not restored the registration, causing significant detriment to the petitioner's business operations.Revocation of GST Registration:The initial cancellation of the petitioner's GST registration was based on a show-cause notice (SCN) dated 28.09.2021, alleging registration obtained through fraud or misstatement. The petitioner failed to respond to the SCN, leading to the cancellation of registration on 10.10.2021. However, the first appellate authority reversed this cancellation, citing the petitioner's submission of an undertaking to comply with tax obligations and the absence of wilful default.Failure to Respond to Show-Cause Notice:The petitioner did not file a response to the SCN nor appeared before the concerned officer, yet the cancellation order referenced a non-existent reply dated 07.10.2021. The first appellate authority found the petitioner's reasons for revocation of cancellation sufficient, especially considering the submissions made and relevant documents provided.Physical Inspection Notice:The petitioner's counsel highlighted that no notice of physical inspection was served on the petitioner, and the reason for cancellation based on premises inspection was not mentioned in the cancellation order. The court agreed that the absence of this reason in the cancellation order, along with the lack of compliance with procedural requirements for physical inspection, warranted the restoration of the petitioner's GST registration.Conclusion:The court directed the respondents/revenue to comply with the OIA and restore the petitioner's GST registration within one week. Emphasizing the need for adherence to procedural fairness and the appellate authority's decision, the judgment underscored the importance of following due process in matters of GST registration cancellations and revocations.