SCN Lacks Reason For Proposing GST Registration Cancellation: Delhi High Court Revokes Cancellation

The Delhi High Court has revoked the GST registration cancellation on the grounds that the show cause notice lacked the reason for proposing to cancel the petitioner's GST registration. It merely stated that proceedings for cancellation of the GST registration have been initiated.

The bench of Justice Vibhu Bakhru and Justice Sachin Datta has observed that the show cause notice stated that proceedings for cancellation of the GST registration have been initiated. The cancellation order was unreasonable. Thus the show cause notice and cancellation order are liable to be set aside.

The petitioner/assessee claimed that it owns a hotel, the operation and management of which were handed over to another company. The petitioner/assessee claimed that its office is also located in the same building as the hotel on the fourth floor. In the first week of October 2023, certain officials of the department had visited the hotel enquiring about the petitioner's details; however, the person at the reception desk was unable to provide the same as the company managing the hotel was recently engaged.

The proper officer issued a Show Cause Notice proposing to cancel the petitioner's GST registration. The only reason set out in the SCN for proposing the adverse action reads as “initiation of cancellation of GST registration.”

The petitioner responded to the SCN, explaining that its office was located on the 4th floor in the same building. However, because of the new management team, correct information was not provided to the concerned officer.

The proper officer passed the impugned cancellation order, canceling the petitioner's GST registration retrospectively with effect from 01.07.2017.

The petitioner thereafter preferred an appeal dated 05.01.2024 under Section 107 of the Central Goods and Services Tax Act, 2017 assailing the impugned cancellation order. The petitioner also provided the evidence and material to establish that its principal place of business was located at the fourth floor of the hotel building, as claimed.

The Appellate Authority rejected the petitioner's appeal on the ground that the documents were not attested and the petitioner had failed to submit the ownership document of the building in question. The Appellate Authority also rejected the petitioner's appeal for the reason that it had not obtained the No Objection Certificate from the Anti-Evasion Branch.

The court, while allowing the petition, held that the cancellation order canceling the petitioner's GST registration was revoked and directed the department to restore the petitioner's GST registration.

Counsel For Petitioner: Ruchir Bhatia

Counsel For Respondent: Arnav Kumar

Case Title: Scope Promoters P. Ltd. Versus Commissioner Of Central Goods And Services Tax Delhi & Anr.

Citation: 2024 LiveLaw (Del) 904

Case No.: W.P.(C) 11151/2024 & CM APPL. 46090/2024

Click Here To Read The Order