Delhi HC Quashes GST Cancellation Order Due to Lack of Specifics in Show Cause Notice

Discovering that the Show Cause notice (SCN) does not cite any particulars that furnish any clue to the assesses as to the cause for the GST registration cancellation, the Delhi High Court quashed the show cause notice and the order through which the GST commissioner has cancelled the GST registration of the applicant with the retrospective effect.

The Division Bench of Justice Vibhu Bakhru and Justice Sachin Datta observed that “The SCN did not mention any intelligible reason. It merely set out the provision that would enable the proper officer to cancel a taxpayer’s registration on the ground of violation by the provisions of the CGST Act/DGST Act or the CGST Rules, 2017/ Delhi GST Rules, 2017 leading to wrongful availment or utilization of input tax credit or refund of tax”. (Para 13)

Case Background and Key Facts

The applicant/taxpayer was directed to respond to SCN in 7 working days from the date of service of Show Cause Notice (SCN). The applicant was put to notice that if he is unable to appear for a personal hearing on the set time and date, the matter shall get decided ex parte. However, the SCN does not cite any appointed date, time, or venue for the applicant to appear for the personal hearing. Indeed the GST registration of the applicant was even suspended as per the SCN. Subsequently, the applicant furnished an application asking for the revocation of the cancellation order, which was rejected.

Against the cancellation order, the applicant files an appeal under section 107 of the CGST Act, 2017 and the Delhi GST Act, 2017, that indeed gets rejected based on the position that the applicant does not appear as per the notice served to the applicant via the GST portal. Therefore the applicant contesting the GST cancellation approached the High Court which was issued as per Show Cause notice.

High Court’s Observations

It was discovered to the bench that the order cancellation had passed in breach of the norms of natural justice.

In breach of the norms of natural justice the successive applications furnished via the applicant for the impugned cancellation order were indeed rejected, Bench mentioned.

The bench remarked that the show cause notice does not cite any venue, date, or time for the applicant to appear for the personal hearing.

SCN does not offer any measure for the retrospectively cancelling the GST registration of the applicant, it was discovered by the bench that the authority has cancelled the GST registration of the applicant from the date when it was allotted.

Bench cited that the order cancellation is nonbinding, being passed in breach of the norms of natural justice.

Bench’s pointing particularly cited that at first, the applicant was not been provided any reasonable cause for pursuing to cancellation of its GST registration, and also the applicant was not served a chance of being personally heard.

Given that there was no recommended action for the retrospective cancellation of the petitioner’s GST registration, and the cancellation order failed to specify any reasons for its decision, the Bench invalidated the GST cancellation order due to a breach of natural justice principles.

Therefore the HC permitted the petition of the taxpayer and asked respondents to restore the GST registration of the applicant.

The High Court made it clear that the decision to quash the order does not prevent the respondents from taking new legal action against the petitioner for any violations of the law or for recovering any owed payments, as permitted by law.

Case Title	M/S Chauhan Construction Co. Vs. Commissioner of DGST
Citation	W.P.(C) 12506/2024
Date	06.09.2024
Counsel For Petitioner	Vineet Bhatia
Counsel For Respondents	Aviskar Singhvi, Vivek Kr Singh, Naved Ahmed and Shubham Kumar
Delhi High Court	Read Order