Show Cause Notice Does Not Provide Any Clue Why Petitioner's GST Registration To Be Cancelled ; Delhi HC sets aside Show Cause Notice

The Delhi High Court held that the purpose of issuing a show cause notice is to enable a noticee to respond to the allegations based on which an adverse order is proposed. Hence, the High Court quashed the order as well as SCN observing that the SCN is not intelligible as it does not specify the reason for cancelling the petitioner's GST registration. The Division Bench of Justice Vibhu Bakhru and Justice Sachin Datta observed that “In the present case, the impugned SCN fails to meet the requisite standards of a show cause notice as it does not provide any clue as to why the petitioner's GST registration was proposed to be cancelled”. Facts of the case The petitioner was called upon to furnish a reply to a show cause notice (SCN) within a period of seven days from the date of the SCN and also to appear before the concerned proper officer. However, to the shock of petitioner, its GST registration was suspended with effect from the date of the SCN and an order was passed proposing to cancel the petitioner's GST registration. The only ground set out in the impugned SCN reads as “Others”. The petitioner thereafter filed an appeal u/s 107 of the CGST Act, 2017/ DGST Act, which is pending consideration. Hence, the petitioner approached the High Court. Observation of the High Court From the reason set out in the order for cancelling the petitioner's GST registration, the Bench found that the petitioner had neither appeared for a personal hearing nor submitted any documents in its favour. From the impugned order, the Bench also recorded the tentative conclusion of the proper officer that the petitioner had secured the GST registration by fake documents, and therefore the proper officer had cancelled its registration for “the sake of govt. revenue”. At the same time, the Bench found that the impugned order sets out a table which indicates that no tax was determined as due from the petitioner. The Bench pointed that the impugned SCN which was issued for the purpose of enabling the petitioner to respond to the allegations set out therein, does not state any allegations regarding the petitioner not being found at the given premises. The impugned order also does not mention that any physical verification of the petitioner's premises was undertaken and was found to be non-existent, added the Bench. The Bench stated that the only reason stated in the impugned order for cancelling the petitioner's GST registration is that it appeared that the petitioner obtained the registration by fake documents, a reason which did not find any mention in the impugned SCN. Hence, the High Court set aside the impugned SCN as well as the order, and directed the petitioner's GST registration to be restored forthwith. Counsel for Petitioner/ Assessee: Anshuj Dhingra, Shubhangda Singh and Muskan Banga Counsel for Respondent/ Revenue: Gibran Naushad Case Title: Saluja Electronics versus Commissioner of CGST and Central Excise Case Number: W.P.(C) 11725/2024 Click Here To Read/ Download Order

Show Cause Notice Does Not Provide Any Clue Why Petitioner's GST Registration To Be Cancelled ; Delhi HC sets aside Show Cause Notice

Pankaj Bajpai

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