Delhi HC: GST Officials to Review GSTIN Cancellation Order as Not Issued by Authorized Officer

The Delhi High Court Division Bench, in a Goods and Services Tax (GST) registration cancellation petition, ordered the petitioner to get a re-examination from authorities.

The petitioner a sole proprietor of M/s Metal Edge, challenged a decision where the petitioner’s GST registration was cancelled. The petitioner asserted that respondent no. 1 (Sales Tax Officer Class II), who is not a “proper officer” and lacks the authority to issue such orders, even after that impugned order. The petitioner further questioned respondent no. 1’s proposal to raise a demand of ₹95,81,779.10/- after receiving a show cause notice under Section 73 of the Central Goods and Services Tax Act, 2017.

However, the petitioner’s challenge to the impugned order cancelling its GST registration and on the basis of that the show cause notice was not issued by the proper officers therefore, it is unjustified.

The Commissioner of Trade and Taxes assigned the duty under Sections 73 and 74 of the CGST Act to be carried out by a proper officer “to all the Assistant Commissioners and Goods and Services Tax Officers of this department, as per the notification dated January 11, 2019.

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The petitioner’s counsel argued that the Sales Tax official Class II, AVATO, who issued both the impugned order and the show cause notice, was not at the rank to act as a Proper Official because he did not hold the status of Assistant Commissioner.

The petitioner further argued that the impugned show cause notice issued under Section 73 of the CGST Act lacked jurisdiction because Central Goods and Service Tax Authorities, Chandigarh had previously investigated the matter of the petitioner.

Additionally, it was stated that respondent number 2 had already taken possession of the entire file on the petitioner’s concern during the course of the investigation by Chandigarh authorities. This was done under Section 6 of the CGST Act, which states that respondent number 1 is not permitted to initiate a parallel investigation.

On the other hand, the counsel of the revenue argued that Respondent No. 1 is a GST Officer and, as a result, the notification dated November 1, 2019, designating the Goods and Services Tax Officer as a proper officer would also include the said officer with the authority to issue the impugned show cause notice under Section 73 of the CGST Act and to pass the impugned order cancelling the petitioner’s registration.

The bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the petitioner is not prevented from investigating her claim that the proceedings regarding the impugned show cause notice are not acceptable, before the concerned officer.

The judgment further stated that the petitioner is permitted to question the impugned show cause notice. It is obvious that the concerned officer will carefully analyze and examine the objection if it is raised.

The counsel chose not to take the cancellation of the GST registration in court. The bench made it clear that the petitioner is still free to pursue this matter with the authorities again, if applicable. The current petition was dismissed because the High Court did not find adequate justification to consider it.