GST | Show Cause Notice Must Clearly Indicate Reasons For Which Registration Cancellation Is Proposed: Delhi High Court

Delhi High Court has recently set aside show cause notice proposing to cancel GST registration and the consequential order cancelling the same on the ground that reasons for cancelling registration of assesee were not clearly mentioned in the show cause notice.

A bench comprising of Justices Vibhu Bakhru and Amit Mahajan held

“At the least, the Show Cause Notice must clearly indicate the reasons for which an adverse order is proposed to be passed in order for the noticee to respond to the same.”

Petitioner was issued a show cause notice for cancellation of GST for the reason that “In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.” It was also stated that the registration was cancelled from the date of the show cause notice. The petitioner was required to appear three days from the show cause notice. However, could not appear and an ex-parte, suo-moto order was passed cancelling the GST registration of the petitioner with retrospective effect due to no reply from the petitioner.

The Court observed that the cancellation was done merely because the firm was not found existing at its principal place of business. However, the application for change of principal place of business had already been approved by the concerned authority and amended GST registration certificate had already been issued to the petitioner. The inspection had been made at the old premises instead of the new one.

The Court held that the order “does not reflect any intelligible reason” for cancellation of GST registration. Further, it was held that the show cause notice did not contain any reasons for retrospective cancellation of GST registration of the petitioner.

“It is also not clear whether the petitioner’s registration was cancelled on account of fraud, wilful misstatement or suppression of facts, since all the three reasons were mentioned,” observed the Court.

Accordingly, the writ petition was allowed on the ground that “the Show Cause Notice falls short on the standards required of a Show Cause Notice.”

Case Title: M/S Frequent Logistics Services PVT. LTD. v. Commissioner Goods and Service Tax Department And ORS.

Citation: 2023 LiveLaw (Del) 799

Counsel for Petitioner: Mr Nishit Agrawal, Ms Meena Rawat, Ms Kanishka Mittal and Ms Vanya Agrawal

Counsel for Respondent: Mr R. Ramachandran

Click Here To Read/Download Order