Calcutta HC Upholds GSTIN Cancellation Over Non-Response to GST Notice and Lack of Business Presence

The Calcutta High Court, in a ruling, upheld the cancellation of a taxpayer’s GST registration after the taxpayer failed to respond to a Show Cause Notice (SCN) and was found to have no business presence at the registered address.

The applicant, Md. Firoz had obtained GST registration for his business under the name “Domain Enterprises” at Howrah. A field investigation by the Bureau of Investigation, South Bengal Headquarters, disclosed that the registered premises were mainly a residential building, with only one commercial room that was locked and had no signage showing business activity.

The GST authorities, based on such findings, issued an SCN dated 19.07.2023 asking for the cancellation of the applicant’s registration based on the misrepresentation and suppression of material facts. The applicant, even after being given the chance to answer, did not answer the SCN. The GST registration dated 07.08.2023 was cancelled.

Thereafter, the applicant appealed the decision to the appellate authority, which kept the cancellation dated 05.09.2024, citing that no proof was there to establish that the applicant was performing the business from the registered address.

The applicant’s counsel at the time of the hearing claimed that the tax authorities failed to regard the significant documents along with a leave and license agreement and electricity bills under the name of his licensor. The counsel of the applicant claims that the applicant was not needed to prove the ownership of the premises, merely his right to conduct business there, and also claimed to have moved his business to a new address before the cancellation.

It was opposed by the counsel of the department that the failure of the applicant to answer to the SCN coupled with the findings of the field investigation explained the cancellation. They specified that no proof was there for the actual business operations at the registered location, no proof of rent payments, and no answer from the applicant even at the time of the appellate proceedings.

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It was noted by Justice Raja Basu Chowdhury that the applicant has not contested the findings of the Bureau of Investigation, nor had he furnished any substantive proof of continuing business activities at the questioned address.

It was ruled by the court that the decision of the proper officer to cancel the registration was founded on a plausible inference from the investigation report and was not arbitrary or perverse.

It was held by the court that no interference was warranted since the petitioner had been unable to establish his case and had not availed the opportunities given to him during the proceedings. The GST registration cancellation was kept.