Judicial Intervention Nullifies GST Registration Cancellation Order Due to Procedural Defects and Lack of Proper Justification

The HC quashed a retrospective GST registration cancellation order due to procedural irregularities. The court found the cancellation order lacked proper justification and the show cause notice was defective. HC directed the petitioner to file a reply within one week and mandated the tax authorities to conduct a fresh adjudication proceeding with a personal hearing within four weeks, reserving all legal rights of both parties.

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Issues involved:
The issues involved in the judgment are the cancellation of GST registration of the petitioner with retrospective effect and the procedural irregularities in the Show Cause Notice.

Cancellation of GST Registration with Retrospective Effect:
The petitioner challenged the order dated 16.01.2024, which cancelled their GST registration with effect from 15.07.2022. The court noted that the order of cancellation lacked reasons and was issued retrospectively without proper justification. The court emphasized that the proper officer cannot cancel registration with retrospective effect mechanically, but must base the decision on objective criteria. Mere non-filing of returns does not automatically warrant retrospective cancellation covering the period of compliance.

Procedural Irregularities in Show Cause Notice:
The petitioner contended that the Show Cause Notice issued on 21.12.2023 did not provide sufficient time for response or appearance. It was highlighted that the Notice did not mention the name or designation of the issuing officer, denying the petitioner the opportunity to represent their case. The court observed that the Notice lacked essential details and did not allow the petitioner to comply within the stipulated timeframe, thus violating procedural fairness.

Judgment:
The court set aside the impugned order of cancellation dated 16.01.2024 and directed the petitioner to file a reply to the Show Cause Notice within one week at the office of the Principal Commissioner of Goods and Service Tax, West Delhi. The respondent was instructed to forward the reply to the Proper Officer for adjudication. The Proper Officer was mandated to conduct adjudication proceedings, including a personal hearing for the petitioner, within four weeks from receiving the reply. Additionally, the Proper Officer was given the authority to conduct a fresh inspection of the petitioner's premises if necessary. The petition was disposed of with all rights and contentions of the parties reserved.

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