Rahul Kumar Jain and Co. Vs Union of India
Date: September 11, 2023
Subject Matter
SCN proposing cancellation of registration without reasons cannot be sustained
Summary
The petitioner's GST registration was cancelled after receiving a show cause notice alleging fraud, wilful misstatement, or suppression of facts. The petitioner requested specific grounds for the allegations but did not receive any further information. The order for cancellation of registration did not provide any reasons. The Court held that show cause notices and orders without reasons cannot be sustained. The petition is allowed with a cost of ₹5,000/- to be paid to the petitioner. Pending applications are also disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition impugning an order dated 29.05.2023 whereby, the petitioner’s GST registration was cancelled pursuant to a show cause notice dated 16.05.2023.
2. The proper officer proposed to cancel the petitioner’s GSTIN and issued the aforementioned show cause notice dated 16.05.2023, stating as under: –
“Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:
1 Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts
You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
You are hereby directed to appear before the undersigned on 22/05/2023 at 11:30 AM.”
3. As it is apparent from the above, the show cause notice dated 16.05.2023 merely alleged that the petitioner’s GST registration was proposed to be cancelled on account of fraud, wilful misstatement or suppression of facts; however, it did not provide any specific reason as to the alleged fraud, wilful misstatement and it did not provide any clue as to the facts which were allegedly suppressed.
4. The petitioner responded to the said show cause notice dated 16.05.2023 denying that it had obtained the GST registration by fraud, wilful misstatement or suppression of facts. The petitioner also stated as under:-
“We understand the seriousness of the allegations made us, hence, would like to understand why and on what ground, the department has alleged that we have taken registration by means of fraud, wilful misstatements or suppression of facts so as we can submit our defence and detailed reply in this regard.”
5. It is evident from the above that the petitioner had no clue as to why its GST registration was sought to be cancelled. The petitioner’s request for providing further specific grounds was not acceded to and no further information was provided to the petitioner.
6. The impugned order does not mention any reason whatsoever for the cancellation of the petitioner’s GST registration. It merely states that it is an order for cancellation of registration and is in reference to the show cause notice dated 16.05.2023. It further states that the effective date of the cancellation of the GST registration is 04.05.2018.
7. This Court has, in a number of decisions, held that such show cause notices and orders which are not informed by any reasons cannot be sustained, however, tax payers continue to be vexed by such show cause notices and orders that provide no reason, whatsoever.
8. We, accordingly, consider it apposite to allow the present petition albeit with the cost of ₹5,000/-. The cost shall be paid to the petitioner, within a period of two weeks from today. All pending applications are also disposed of.