Delhi HC: Fraudulent Allegations Must Be Clearly Explained in GSTIN Cancellation Notice

The Delhi High Court for the case of M/S SK Enterprises Vs. Principal Commissioner of GST held that the GSTIN Cancellation Notice should set out bogus allegations.

The present petition impugning the order on 19.07.2023 (hereafter ‘the impugned order’) has been filed by the applicant revoking the GST registration of the applicant w.e.f. 23.05.2022. On 05.07.2023 the impugned order was passed under the show cause notice (hereafter ‘the SCN’).

A plain SCN reading of the applicant’s GST registration was proposed to be cancelled for the below-stated reason-

“1. Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts.”

The applicant was asked to finish an answer to the SCN within 7 working days from the service date of SCN. the applicant was indeed rendered to be present before the pertinent officer dated 06.07.2023. Moreover, the GST registration of the applicant was suspended w.e.f. from the SCN date i.e. from 05.07.2023.

SCN plain reading mentions that the same does not set out any particular cause for asking to revoke the GST registration of the applicant. However, it is alleged that the applicant has received the registration via bogus means, the wilful misstatement, or the suppression of the fact. It neither shows that the alleged fraud nor the misstatement alleged to have been made via the applicant. No clue is been provided as to the facts allegedly suppressed by the applicant.

It is a normal thing that on the grounds on which the adverse action might be proposed a show cause notice should specify the allegations to enable the notice to a meaningful answer to that. The SCN in the current matter unable to attain the mentioned standards.

No reason is directed by the impugned order and the same only specifies that it is been provided concerning the show cause notice (SCN).

With the retrospective effect from 23.5.2023, it is seen that the GST registration of the applicant has been cancelled. No reason is provided for doing so either via SCN or by the impugned order.

The petition is permitted given the aforesaid. SCN and the impugned order are set aside.

The respondent is rendered to restore the GST registration of the petitioner.

The same order does not preclude the respondent from starting or pursuing any proceedings when the same is revealed that the applicant has been non-compliant or is breaching any provision of law. The petition is disposed of.