Delhi HC Cancels GST Demand Order of ₹2.33 Cr Due to Non-Receipt of SCN and Inaccessibility of Portal

The Delhi High Court in a ruling has set aside a GST demand of Rs 2, 33, 46,912, crores, quoting the non-receipt of SCN and the inaccessibility of the GST portal following the death of the director and the forthcoming closure of the business.

The applicant, Retrovis Fashion Pvt. Ltd challenged an order on April 2, 2024, issued by the Adjudicating Authority under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Delhi Goods and Services Tax Act, 2017 (DGST Act). This order confirmed a demand of Rs 2, 33, 46,912, including interest and penalty.

From a SCN the contested order has been derived and issued on December 27, 2023. The applicant has claimed that it did not obtain the SCN, which bounded its ability to answer, for the non-receipt various reasons were furnished, along with the passing of the authorized signatory registered in the GST portal due to COVID-19 on November 16, 2020.

Complying with this, access to the GST portal was blocked due to the cancellation of the registration, with the deceased signatory being the only individual authorized to access the portal. It ceased business operations on April 1, 2019, the applicant mentioned.

Even after the issuance of the SCN via the respondent and a following notice for a personal hearing through the GST portal on February 29, 2024, the applicant was not able to access the portal because of the earlier cancellation and the death of the authorized signatory. Also, no notice was furnished before the applicant through the physical mail.

It was notified by the applicant that its GST registration was cancelled on January 13, 2020. The company, a closely held entity was administered by its director, Mr. Vikas Gupta, who also served as the authorized signatory in the GST records. Following Mr. Gupta’s death on November 16, 2020, the company suspended its business operations.

The counsel of the applicant Mr. Mukesh Chand emphasized that the email ID furnished before the GST authorities belong to Mr. Gupta, and as the business operations have stopped no chance is there to validate the same information.

The explanation for the non-receipt of the SCN merits consideration, said Mr. Gupta representing the respondent.

The impugned order has been set aside by the division bench Justice Vibhu Bhakru and Justice Sachin Datta who remanded the case before the adjudicating authority for fresh consideration. The bench asked that the applicant provide a reply to the SCN within 2 weeks from the order date.

Read Also: Delhi HC Nullifies GST SCN Due to Failure to Dispatch REG-31 Form to Petitioner

The Adjudicating Authority is recommended to check any reply proposed and issue a reasoned order, providing the applicant with a chance to be heard. Therefore the present petition has been disposed of.