SCN Did Not Indicate Specific Allegation Of Non-Compliance Of Statutory Provision In Invoice: Delhi High Court Quashes SCN And Restores GST Registration
Pankaj Bajpai
17 Aug 2024 3:40 AM GMT
Finding that no document is annexed with the impugned show cause notice (SCN) which provides any clue as to which allegation is sought to be raised against the assessee, the Delhi High Court quashed the SCN. The High Court also clarified that issuance of the show cause notice would be rendered meaningless in absence of any specific allegation. The Division Bench of Justice...
Finding that no document is annexed with the impugned show cause notice (SCN) which provides any clue as to which allegation is sought to be raised against the assessee, the Delhi High Court quashed the SCN.
The High Court also clarified that issuance of the show cause notice would be rendered meaningless in absence of any specific allegation.
The Division Bench of Justice Vibhu Bakhru and Justice Sachin Datta observed that “The purpose of issuance of the show cause notice is to enable the noticee to respond to the allegations based on which an adverse action is proposed. Absent of any specific allegation, the issuance of the show cause notice is rendered meaningless”. (Para 9)
Facts of the case
The petitioner/ Assessee was called upon to file a reply to the SCN within seven working days from the date of service of notice and additionally, its GST registration was suspended on the date of issuance of said SCN. In reply, the petitioner stated that the SCN is cryptic in nature and no specific allegations as to which bill or invoice was issued without the supply of goods or services or both have been mentioned. It is contended that one month has elapsed after the reply was submitted by the petitioner, yet no decision has been taken on the SCN.
Hence, the petitioner approached the High Court challenging the show cause notice issued by the proper officer calling upon the petitioner to show cause as to why his Goods and Services Tax (GST) registration not be cancelled.
Observation of the High Court
From perusal of the SCN, the Bench found that the same does not provide any specific reason for proposing to cancel the petitioner's GST registration.
The SCN has merely reproduced Rule 21(b) of the Central Goods and Services Tax Rules, 2017, and does not indicate as to which bill or transaction is alleged to be in non-compliance of the statutory provisions, added the Bench.
Although, the Bench observed that Rule 21(b) of the CGST Rules provides for the cancellation of the GST registration in case the tax payer issues the invoice or bill without the supply of goods or services in violation of the provisions of the CGST Act.
However, the Bench pointed that the proper officer has failed to specify as to which invoice / bill is without the supply of goods or services has been allegedly issued by the petitioner.
The Bench observed that the purpose of issuance of the show cause notice is to enable the noticee to respond to the allegations based on which an adverse action is proposed.
In the present case, the High Court found that the SCN fails to meet the requisite standards of the show cause notice, and hence quashed the show cause notice.
While allowing the Assessee's petition, the High Court also directed the Respondents to restore the petitioner's GST registration.
Counsel for Petitioner/ Assessee: Anurag Rajput, Sahib Rajput, Dhruv Bhardwaj, Parul Bisht, Priyavansh Kaushik, Alekh, Varsha and Jadkirat Kaur
Counsel for Respondent/ Revenue: Rajeev Aggarwal and Shubham Goel
Case Title: Prince Garg versus Avato Ward 63 State Goods and Service Tax & Anr.
Case Number: W.P.(C) 10953/2024 & CM APPL. 45215/2024
