GST Registration Cancellation Overturned: Procedural Flaws Invalidate Order, Directs Fresh Notice with Comprehensive Grounds

HC found the GST registration cancellation order invalid due to procedural irregularities. The order was set aside for lack of reasoned explanation, violation of natural justice principles, and retrospective cancellation without proper notice. Respondent was permitted to issue a fresh show cause notice with detailed grounds, preserving all parties' legal rights.

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Issues:
Petitioner seeks restoration of GST registration and challenges cancellation order citing lack of reasons and violation of natural justice.

Analysis:
The petitioner filed a petition seeking restoration of Goods and Services Tax (GST) registration and challenging the cancellation order dated 16.10.2023. The petitioner was registered with GSTIN 07FYEPR3772P1ZI since 24.09.2022. The Proper Officer issued a show cause notice (SCN) on 26.09.2023, proposing cancellation under Section 29(2)(e) for alleged fraud or misstatement. The SCN also mentioned the petitioner was labeled 'non-existent' by the Principal Commissioner of GST and Central Excise, Delhi North. The petitioner's GST registration was suspended from 26.09.2023, the SCN issuance date.

The petitioner responded to the SCN on 06.10.2023, providing supporting documents like rent agreement, Pan Card, Adhaar Card, and electricity bill. However, the Proper Officer disregarded the response and issued the cancellation order retrospectively from 25.09.2022 without addressing the petitioner's reply. The order lacked reasons for rejection and failed to provide documents from the Principal Commissioner's office used as grounds for cancellation.

The respondent's counsel submitted additional documents like an inspector's report, Panchnama, and a photograph of the petitioner's premises, which were not initially shared with the petitioner. These documents formed the basis for cancellation but were not provided for the petitioner's response, violating principles of natural justice. The cancellation order did not justify the retrospective cancellation or consider the petitioner's submissions, further highlighting procedural irregularities.

The Court held the cancellation order and SCN to be set aside due to lack of reasons, violation of natural justice, and retrospective cancellation without proper notice. The respondent was not precluded from issuing a fresh show cause notice with detailed grounds and passing an order lawfully. The judgment reserved all rights and contentions of the parties, disposing of the petition and pending application accordingly.

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