SCN Without Any Reasons: Delhi High Court Quashes Order Cancelling GST Registration

The Delhi High Court has quashed the order cancelling the GST registration as the Range Inspector has physically verified the premises, neither by serving any notice of the physical verification nor in the report generated after the verification was uploaded on the portal.

The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has observed that there was an infraction of the provisions of Rule 25 of the CGST and the order has gone beyond the frame of the Show Cause Notice.

The petitioner/assessee assailed the order cancelling its GST registration. The order was based on the show-cause notice. The SCN revealed that there is next to nothing stated as to the reason why the concerned authority proposed the cancellation of registration.

The department, ironically, puts the onus on the petitioner to demonstrate that registration has been obtained by fraud, willful misstatement, or suppression of facts.

Since, ostensibly, principles of natural justice were sought to be adhered to by the department, the petitioner was directed to file a reply to the SCN during the timeframe of seven days.

The petitioner filed a reply to the SCN stating that it had filed all the duly returned items up to February 2022. All the GST liabilities have been properly discharged and all other due compliances regarding GST compliances have been properly compiled within the stimulated bracket of the GST Act 2017.

Within less than a month, the order was passed. As per the order, the petitioner's registration was cancelled on account of an enquiry pending against the petitioner, which evidently is being carried out by DGGI, Chennai, concerning the supply of "spurious goods." The premises of the petitioner were physically verified by the Range Inspector, after receiving approval from the competent authority, and it was found that the premises had been sealed by DGGI, Chennai. The order revealed that nothing was due from the petitioner on account of tax, interest, penalty, or cess.

The court noted that the SCN did not advertise the facets, which were referred to in the order by which the petitioner's registration had been cancelled.

The court stated that the department was unable to give a satisfactory answer as to whether or not the verification report had been uploaded on the designated portal.

The court directed the department to restore the registration of the petitioner.

Case Title: Balaji Enterprises Versus Principal Additional Director General

Citation: 2022 LiveLaw (Del) 986

Date: 07.09.2022

Counsel For Petitioner: Advocate Anjali J. Manish, Priyadarshi Manish

Counsel For Respondent: Sr. Standing Counsel Aditya Singla

Click Here To Read Order