GST registration cancellation set aside for lack of independent consideration by authority acting on external directions

Delhi HC set aside GST registration cancellation order passed solely on directions from another authority without independent consideration of petitioner's reply to show cause notice. Court held that authorities must independently exercise decision-making powers and cannot act merely on directions from other authorities. The appellate authority should have condoned the fourteen-day delay in filing appeal, given petitioner's interactions with department for resolution. Court emphasized that GST registration cancellation has wide implications for taxpayers and can bring business to standstill, requiring circumspect exercise of such powers only when necessary.

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Issues involved:
The cancellation of GST Registration and the subsequent appeal process.

Details of the Judgment:

1. The petitioner challenged the cancellation of her GST Registration and sought a refund of Rs. 20,00,000 deposited under pressure by the respondent authorities. However, the petitioner later decided not to seek relief regarding the deposit at that stage but reserved the right for future remedies.

2. The petition focused on challenging the Order-in-Original dated 28.10.2022 canceling the petitioner's GST Registration and the Order-in-Appeal dated 30.05.2023 rejecting the petitioner's appeal against the cancellation.

3. The petitioner, engaged in the import and distribution of chemicals and minerals, claimed to have operated under a sole proprietorship concern since before the GST Regime rollout and was registered under the Delhi Value Added Tax Act, 2004.

4. The Anti Evasion Staff of Central Tax CGST visited the petitioner's premises on 07.09.2022, seized documents without a panchnama, and pressured the petitioner's father-in-law to deposit Rs. 10,00,000, leading to the cancellation of GST Registration.

5. The Show Cause Notice dated 06.10.2022 alleged non-compliance with a summons under the CGST Act, which the petitioner contested, but her registration was still canceled on 28.10.2022 based on directions from another authority without considering her response adequately.

6. The petitioner's appeal against the cancellation was rejected on grounds of limitation for filing the appeal after the prescribed period, even though the delay was explained and the Appellate Authority had the discretion to condone it for up to one month.

7. The judgment highlighted that the cancellation of GST Registration should be a measure exercised cautiously, as it can severely impact a taxpayer's business operations, and decisions should be made independently without solely relying on directions from other authorities.

8. Ultimately, the Court set aside the Show Cause Notice, Order-in-Original, and Order-in-Appeal, emphasizing that any adverse actions against the petitioner should be accompanied by a proper Show Cause Notice with reasons to ensure fair proceedings.

9. The petition was disposed of accordingly, with all pending applications also being resolved.

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