The Hon’ble Delhi high court in Shakti Shiva Magnets Private Limited v. Assistant Commissioner & Ors [W.P.(C) 1559/2022 dated January 31, 2022, refused the Show cause notice provided by the revenue department suspending the enrollment for GST of the taxpayer and rendered to again provide the new SCN through all the concerned facts and cause in a duration of 7 days.
Points: The applicant owner of Shakti Shiva Magnets Private Limited furnished the same application with respect to the SCN provided on 11th Nov 2021 (“the impugned SCN”) by GST Revenue Department (“the Respondent”) because of which the applicant’s enrollments were suspended exceeding two months with no elaboration or cause or facts.
The applicant specified that under Rule 21A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) that mentioned the situations required to meet for suspending the enrollment and Rule 22(3) of the CGST Rules in which the same is given that the taxpayer’s enrollment would be suspended for 30 days and the revocation proceeding must be finished in the given duration.
Moreover, the respondent prayed for 3 days to provide the new informative SCN to the applicant and 15 days time to decide that.
Main Issue: Whether the respondent would suspend the enrollment of the applicant with no elaboration, reason, or fact beneath the CGST compliance?
Held: The Hon’ble Delhi High Court in W.P.(C) 1559/2022 on January 31 2022, carried as under:
- Examined that the impugned SCN comprises of no fact or causes and does not get assistance through any document relied on which the applicant’s enrollment would be suspended.
- Quashed the impugned SCN
- Directed the respondent to restore the applicant’s GST enrollment. But permitted the respondent to provide the new SCN providing all the concerning facts and causes in a week.
- Moreover, it rendered that the respondent to provide the practice direction so that in future when any SCN towards refusing the GST enrollment is provided that would not be with any particulars or causes.
Legal Provisions
Rule 21A of the CGST Rules:
“Suspension of registration: Where the proper officer has reasons to believe that the GST registration of a person is liable to be cancelled under section 29 or under rule 21, he may suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration under rule 22.”
Rule 22(3) of the CGST Rules:
“Cancellation of registration: Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be canceled, the proper officer shall issue an order in form GST REG-19, within a period of thirty days from the date of application submitted under sub-rule (1) of rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1) or under sub-rule (2A) of rule 21A, cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under sub-section (5) of section 29″.
The Judgment/order of Delhi High court
The concern has been heard through the method of video conferencing.
C.M.No.4459/2022
The permitted exemption without the exceptions.
As per that the application would be disposed of.
W.P.(C) No.1559/2022
In pursuance of the order on 27th January 2022, Mr Ankur Garg, Commissioner, Delhi, GST has joined the proceedings via an online video link.
The impugned show cause notice on 11th November 2021 comprises of no fact or any cause acknowledged by Mr Ankur Garg He indeed agrees that the impugned show cause notice does not being assisted through any document or form on the grounds of which the applicant’s GST enrolment is discontinued. He begs for the 3 days time to provide the new show-cause notice to the applicant and for the 15 days time to decide that.
But the learned counsel for the applicant has brought the courts attention to rule 21A and Rule 22(3) of the Delhi GST Rules, 2017, in which it is given that the taxpayer’s enrollment would be suspended for 13 days and the cancellation proceeding is to be finalized in 30 days.
Currently in this case the applicant’s enrollment is still suspended for more than 2 months on the grounds of the show cause notice without any cause or the fact the court quashes the impugned show cause notice on 11th November 2021 and directs the respondents to reform the applicant’s enrollment immediately. A new show cause notice is to be provided permitted by the respondents prescribing all the subject and the causes in a week. This would be replied to via applicant in the duration of 7 working days from the service date of this notice (rule 22, DGST). The respondents will decide that as per the law in 2 weeks.
The Commissioner, Delhi, GST, is also directed to issue a practice direction so that in the future if any show-cause notice for cancellation of GST registration is issued, the same is not bereft of any material particulars or reasons.
Through the mentioned directions, the current writ petition gets over.
