2023 (2) TMI 983 - HC - GST

GST Registration Cancellation Overturned: Deficient Notice Invalidates Proceedings, Remanded for Proper Hearing and Natural Justice

M/s. Hanuman Enterprises (OPC) Pvt. Ltd. Versus The Commissioner, Delhi Goods And Service Tax & Anr.

HC allowed petition challenging GSTIN registration cancellation. The court found the show cause notice deficient in providing clear reasons for ... Cancellation of registration of petitioner - non-providing of sufficient opportunity to meet the allegations - show cause notice neither disclosed any reason, nor does it enclosed any material which would indicate the reasons for the proposed action - violation of principles of natural justice. HELD THAT:- It is trite law that the show cause notice must indicate the reasons for an adverse order or action proposed to be taken. The object of the show cause notice is to enable the noticee to effectively respond to the allegations / reasons for which such adverse order / action is proposed. The show cause notice dated 25.04.2022 is vague and does not fulfil the fundamental requisites of a show cause notice. It is not considered apposite to examine whether the petitioner’s GSTN registration could be cancelled for the reason stated in the communication dated 29.03.2022 and for that matter, whether the petitioner’s claim for refund could be suspended solely on the basis of the said communication. Suffice it to note, that the petitioner was not provided a sufficient opportunity to counter the aforesaid reasons and present its case before the concerned officer. The matter is remanded back to the Adjudicating Authority to consider afresh. Issues:Petition impugning the cancellation of GSTIN registration on grounds of natural justice violation.Analysis:The petitioner challenged the order canceling their GSTIN registration, alleging a violation of natural justice principles. The show cause notice dated 25.04.2022 cited the reason for cancellation as the firm being suspended under Section 29(2)(a) of the CGST Act 2017 or Delhi SGST Act. However, the notice lacked specific reasons necessary for an effective response, rendering it vague and deficient. The respondent, while acknowledging the absence of reasons in the notice, justified it by referring to a communication from the Directorate General of Goods & Service Tax Intelligence, requesting the registration cancellation to prevent revenue loss. The communication was presented in court, emphasizing it as the sole basis for the cancellation.The court emphasized that a show cause notice must provide clear reasons to enable a meaningful response and defense. Despite the communication from the GST Intelligence unit, the court refrained from determining the validity of the cancellation based on that communication alone. It highlighted the petitioner's right to present a defense and counter the reasons cited before the concerned officer. Consequently, the court set aside the impugned order and remanded the matter to the Adjudicating Authority for fresh consideration.The petitioner was granted one week to respond to the show cause notice dated 25.04.2022, focusing on the reasons stated in the communication from the GST Intelligence unit. The Adjudicating Authority was directed to review the response and issue a new order after providing the petitioner with a fair hearing. The court clarified that it did not assess other grounds in the petition or the merits of the allegations in the communication. It reserved all rights and contentions of the parties, allowing the petition in the specified terms and directing the Registry to include the communication from the GST Intelligence unit in the record, thereby disposing of the pending application.