Frequent Logistics Services Pvt. Ltd Vs Commissioner Goods And Service Tax Department
Date: August 30, 2023
Subject Matter
Registration cancellation set aside as the Show Cause Notice falls short on the standards required of a Show Cause Notice
Summary
The case describes a petition filed by the petitioner challenging the cancellation of their GST registration. The cancellation was made based on a show cause notice that alleged the registration was obtained through fraud, wilful misstatement, or suppression of facts. The petitioner was given a limited time to respond but did not do so. The registration was subsequently cancelled with retrospective effect, citing the failure to receive a reply. The petitioner filed an appeal, which was rejected due to delay. The petitioner argues that the cancellation was unjustified as they had applied for a change of their principal place of business and had obtained an amended certificate of registration. The court allows the petition, setting aside the cancellation order and the show cause notice, noting that they should meet the required standards.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning an order dated 08.06.2022 (hereafter ‘the impugned order’), whereby the petitioner’s GST registration was cancelled.
2. The impugned order was passed pursuant to a Show Cause Notice dated 20.05.2022 (hereafter ‘the Show Cause Notice’). A plain reading of the Show Cause Notice indicates that the petitioner’s GST Registration was proposed to be cancelled for the following reason:
“In case, Registration has been obtained by means of fraud, wilful misstatement or suppression offacts.”
3. The petitioner was called upon to respond to the said Show Cause Notice within a period of seven working days and was also directed to appear before the proper officer on 23.05.2022 at 04:11 PM. The Show Cause Notice also reflected that the petitioner’s GST registration was suspended with effect from 20.05.2022.
4. As is apparent from the above, the Show Cause Notice is cryptic and did not afford the petitioner any sufficient information as to the grounds on which the petitioner’s registration was proposed to be cancelled. Although, it is alleged that the registration had been obtained by fraud, wilful misstatement or suppression of facts, there was no material to indicate as to what fraud is alleged to have been committed; which statement made by the petitioner is alleged to be a misstatement; and which fact was suppressed by the petitioner.
5. It is also not clear whether the petitioner’s registration was cancelled on account of fraud, wilful misstatement or suppression of facts, since all the three reasons were mentioned.
6. The petitioner did not file a reply to the said Show Cause Notice within the stipulated time. In the meanwhile, the proper officer passed the impugned order cancelling the petitioner’s registration with retrospective effect from 27.07.2017. The only reason stated in the said order for cancelling the petitioner’s registration reads as under:
“1. Reply not receive. Hence, the registration Suo Moto cancelled.”
7. It is clear from the above that the impugned order is not informed by reason as it does not reflect any intelligible reason as to why the petitioner’s GST registration was cancelled. Further, the Show Cause Notice did not disclose that the petitioner’s GST Registration was proposed to be cancelled with retrospective effect. The impugned order for the cancellation of the GST registration also does not reflect any ground to support the decision to cancel the GST registration with retrospective effect.
8. The petitioner filed an appeal against the impugned order before the Appellate Authority. However, the appeal was rejected by an Order-in-Appeal dated 09.06.2023, on the ground of delay.
9. It is submitted that the petitioner’s GST registration was cancelled as it was not found to be existing at its principal place of business. However, it is noted that the petitioner had made an application dated 19.08.2021 for change of its registered principal place of business. This application was allowed and the amended certificate of the GST Registration was issued. Admittedly, the concerned officer had inspected the old premises and not the new premises as reflected in the certificate of the GST registration issued on 19.08.2021.
10. In view of the above, the present petition is allowed. The impugned order cancelling the petitioner’s GST registration is set aside. The Show Cause Notice suspending the petitioner’s registration is also set aside.
11. It is clarified that the concerned officers are not precluded from taking such steps which they consider necessary albeit, in accordance with law.
12. The present petition is allowed solely on the ground that the Show Cause Notice falls short on the standards required of a Show Cause Notice. At the least, the Show Cause Notice must clearly indicate the reasons for which an adverse order is proposed to be passed in order for the noticee to respond to the same.
13. The impugned order is set aside for the reason that it is not informed by reason.
14. All pending applications are also disposed of.