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

Delhi HC directed revenue authorities to restore petitioner's cancelled GST registration after they failed to comply with first appellate authority's order. The appellate authority had found the cancellation improper and directed restoration, but revenue did not implement the decision. Court noted that under Rule 25 of CGST Rules 2017, physical verification requires prior notice, which wasn't properly addressed in the original cancellation order. Since revenue authorities didn't challenge the appellate order despite being given opportunity, HC disposed of writ petition directing mandatory restoration of GST registration.

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Issues: Compliance with Order-in-Appeal, Revocation of GST Registration, Failure to Respond to Show-Cause Notice, Physical Inspection Notice

Compliance 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.

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