GST registration cancellation set aside for violating natural justice principles and fundamental business rights

Delhi HC set aside GST registration cancellation order finding violation of natural justice principles. The SCN lacked specific allegations against petitioner who had legitimately sought revocation citing COVID-19 impact on business activities, which was initially allowed. Court noted petitioner's fundamental right to conduct legitimate business cannot be interdicted through registration cancellation. The Proper Officer impermissibly acted on directions from another authority without independent satisfaction of cancellation grounds. Petitioner had provided property tax receipts and explained ownership of principal place of business, filing NIL returns due to lack of business activity. Court directed immediate restoration of GST registration, setting aside cancellation and appellate orders.

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Issues:
Impugning Show Cause Notice, Cancellation Order, and Appellate Order regarding GST registration restoration.

Analysis:
The petitioner, engaged in the business of dealing in metals, had their GST registration cancelled due to alleged non-existence of the business during physical verification. The initial Show Cause Notice (SCN) lacked specific details of the allegation, hindering a meaningful response. The cancellation order was based on the petitioner's non-appearance and lack of response to the SCN, with retrospective effect from a day before the SCN issuance.

The petitioner, claiming ownership of the business premises and providing supporting documents, applied for restoration of GST registration, which was allowed. However, a subsequent SCN proposed cancellation again, citing non-existence during physical verification. The petitioner responded, reiterating business operations from the stated premises.

The cancellation order was passed based on directions from another officer, without providing the related letter to the petitioner for a response, violating natural justice principles. The Appellate Authority rejected the petitioner's appeal for lack of documentary evidence supporting the business's existence during verification.

The court found merit in the petitioner's contentions, emphasizing the fundamental right to carry on legitimate business. The cancellation based on non-existence due to temporary suspension of activities was deemed unjustified. The court set aside the impugned orders, directing restoration of the petitioner's GST registration.

Although the petitioner could have appealed under the CGST Act, the absence of a constituted Appellate Board led the court to entertain the petition. The order allows for future actions if any legal contraventions are found, ensuring due process and the petitioner's right to contest any proposed cancellation in accordance with the law.

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