Proper Officer Has No Evidence That Taxpayer Did Not Exist At Principal Place Of Business: Delhi HC Quashes Order Cancelling GST Registration With Retro Effect

The Division Bench of Justice Vibhu Bakhru and Justice Sachin Datta observed that “letter sent by Deputy Commissioner (Anti Evasion) did not provide any particulars as to on which date the physical verification was conducted. It also provided no material to the proper officer to conclude that the petitioner never existed at the principal place of business”. (Para 8)

Facts of the case

The petitioner/ assessee filed an application seeking cancellation of his GST registration, on the ground that it has closed his business. The proper officer therefore called upon the petitioner to show cause why his application should not be rejected. The concerned officer also called upon the petitioner to submit various documents, which prima facie, are relevant for ascertaining the petitioner's liability under the CGST Act/DGST Act. The petitioner was called upon to furnish party-wise purchase details along with E-way bill; input tax credit (ITC) availed in GSTR-3B vis-a-vis GSTR-2A and GSTR-1; utilised details as per GSTR-3B; input stock details as per Section 29(5) of the CGST Act as on the date of immediately preceding date of cancellation.

The petitioner did not respond to the notice and consequently, the petitioner's application for cancellation of his GST registration was rejected. Thereafter, the proper officer issued the SCN, setting out the only reason for proposing to cancel the petitioner's GST registration, as 'non-existence' of petitioner at his principal place of business.

Observation of the High Court

The Bench found that the SCN did not propose to cancel the petitioner's GST registration with retrospective effect.

However, a letter sent by the Deputy Commissioner (Anti Evasion), CGST West Commissionerate to the Assistant Commissioner, Janakpuri Division, CGST West was projected on the GST portal, which indicated that during the physical verification conducted at the premises of petitioner's principal place of business, the firm was found non-existent, added the Bench.

In terms of the said letter sent by the Deputy Commissioner (Anti Evasion), the Bench noted that the proper officer was directed to initiate the cancellation proceedings from the date of the registration.

Even though the petitioner himself was willing to cancel his GST registration pursuant to closure of his business, the Bench noted that the petitioner is essentially aggrieved by the cancellation of GST registration with retrospective effect.

For such retrospective cancellation of his GST registration, the petitioner was not afforded sufficient opportunity to respond to any such proposed action, added the Bench.

Therefore, the High Court set aside the order cancelling the petitioner's GST registration with retrospective effect.

At the same time, the High Court permitted the petitioner to provide all documents as are considered relevant to establish that the petitioner was existing at the declared principal place of business till closure of the business.

The proper officer shall consider the response of petitioner and pass the appropriate order after affording opportunity to the petitioner of personal hearing as expeditiously as possible, added the Court.

Counsel for Petitioner/ Assessee: Ujwal Ghai

Counsel for Respondent/ Revenue: Aakarsh Srivastava, Vaibhav Gupta and Anand Pandey

Case Title: Singhal Singh Rawat versus Commissioner of Central Goods And Services Tax (CGST)

Citation: 2024 LiveLaw (Del) 1049

Case Number: W.P.(C) 12590/2024

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