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GST registration cancellation set aside due to vague show cause notice violating natural justice under Section 29(2) Delhi HC set aside GST registration cancellation order finding the show cause notice vague and lacking details, violating natural justice principles. The ...
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GST registration cancellation set aside due to vague show cause notice violating natural justice under Section 29(2)
Delhi HC set aside GST registration cancellation order finding the show cause notice vague and lacking details, violating natural justice principles. The court held that retrospective cancellation under Section 29(2) of CGST Act requires objective criteria and proper officer's satisfaction based on warranted circumstances. Registration cannot be cancelled retrospectively merely for non-filing of returns during periods when taxpayer was previously compliant. The cancellation proceedings were deemed defective from foundation level.
Issues involved: Quashing of show cause notice and cancellation order regarding GST registration.
Summary: The petitioner sought the quashing of a show cause notice and cancellation order regarding the registration, obtained on 12.05.2022, as a supplier of plastic granules and PVC Dana. The notice, dated 10.07.2023, alleged registration obtained through fraud, willful misstatement, or suppression of facts, without specifying the category. The cancellation order, dated 25.08.2023, was retrospective to 13.05.2022, lacking reasons or details. The court found both the notice and the order unsustainable due to lack of specifics and directed authorities to rectify errors in the portal for self-contained notices. The respondent's contention of fraud was based on an inspector's report claiming the petitioner's address was untraceable, which the petitioner disputed, requesting a revisit that was not conducted. The court held the proceedings defective, thus rendering further actions on the cancellation invalid. It emphasized that cancellation with retrospective effect should be based on objective criteria, not merely non-filing of returns, considering the impact on customers' input tax credit. The show cause notice and cancellation order were set aside, allowing the respondent to proceed lawfully with proper notice and hearing if cancellation with retrospective effect is pursued.
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