GST Registration Cancellation Overturned: Procedural Flaws and Natural Justice Principles Invalidate Order, Allowing Reinstatement with Return Filing

Mangla Enterprises Versus Commissioner Of Delhi Goods And Services Tax & Ors.

Mangla Enterprises Versus Commissioner Of Delhi Goods And Services Tax & Ors. - 2023 (74) G. S. T. L. 42 (Del.) Issues Involved: Impugning of Show Cause Notice for GST registration cancellation, Lack of opportunity to be heard, Defective Show Cause Notice.

Impugning Show Cause Notice: The petitioner challenged a Show Cause Notice dated 18.11.2020, calling for justification on the potential cancellation of their GST registration (No. GSTIN 07AAKPM6983C1ZF). The notice cited non-filing of GST returns for six consecutive months as the reason for proposed cancellation. However, the notice failed to specify the date and time for the scheduled personal hearing, rendering it defective.

Lack of Opportunity to be Heard: The petitioner's GST registration was subsequently cancelled by an order dated 27.11.2020 without providing adequate opportunity for the petitioner to present their case. The petitioner contended that due to health reasons and the COVID-2019 pandemic, they had temporarily ceased business operations, leading to non-response to the Show Cause Notice.

Defective Show Cause Notice: The Court noted that the impugned Show Cause Notice was deficient in not setting out the date and time for the personal hearing, which violated the principles of natural justice. The cancellation order passed without affording the petitioner a fair hearing was deemed unsustainable.

Judgment: In light of the mitigating circumstances and the procedural flaws, the High Court set aside the order dated 27.11.2020 cancelling the petitioner's registration, along with the Show Cause Notice dated 18.11.2020. The appeal order of 22.08.2022 was also overturned. The respondents were directed to promptly reinstate the petitioner's registration within one week. The petitioner was instructed to regularize GST filings by submitting up-to-date returns within four weeks. The restoration of registration did not exempt the petitioner from potential tax, interest, or penalty recovery proceedings as per the law. The petition was allowed on the mentioned terms.