R S Enterprises vs. Sales Tax Office Class Ii/ Avato Ward 62 & Anr.

Held

The Court held that both the Show Cause Notice (SCN) and the impugned Order for Cancellation of Registration were unsustainable in law. Firstly, the Court noted that the SCN did not contemplate retrospective cancellation of GST registration, citing several High Court decisions, including Riddhi Siddhi Enterprises vs. Commissioner Of Goods And Services Tax (Cgst), South Delhi & Anr., W.P.(C) 8061/2024. Secondly, the Court found the impugned order to be completely unreasoned, lacking any explanation as to why the Petitioner's GST registration was deemed to have been obtained by fraud, willful misstatement, or suppression of facts. The Court observed that the issue of a reply to the SCN was rendered moot as no reply was actually filed, despite an incorrect reference in the cancellation order. Consequently, the SCN and the impugned order were set aside. The Department was, however, granted liberty to proceed against the Petitioner in accordance with law, if any irregularity or non-compliance was found, provided proper reasons were given.

Facts

The Petitioner, R S Enterprises, assailed a Show Cause Notice (SCN) dated August 1, 2021, and an Order for Cancellation of Registration dated July 19, 2022. The SCN alleged fraud, willful misstatement, and suppression of facts. The Order for Cancellation was dismissed by the Appellate Authority on December 22, 2023, for being barred by limitation. A significant issue arose regarding a reply to the SCN, purportedly filed on January 7, 2022. However, the Petitioner did not possess a copy, and the GST Network (GSTN) stated no reply was filed, nor had the Petitioner logged in on that date. The Court had previously directed GSTN to retrieve the reply. The Order for Cancellation also directed retrospective cancellation of GST registration from July 1, 2017, without providing reasons.

Key Issues

1. Whether the Show Cause Notice (SCN) and the subsequent Order for Cancellation of Registration are sustainable in law, particularly concerning the alleged retrospective cancellation and lack of reasoning, as contemplated under the Goods and Services Tax (GST) regime? Petitioner's Arguments: The Petitioner contended that the SCN did not contemplate retrospective cancellation, which is contrary to established legal principles. They further argued that the impugned order for cancellation was completely unreasoned, failing to provide any explanation for the allegations of fraud, misstatement, or suppression. The Petitioner relied on decisions in Riddhi Siddhi Enterprises vs. Commissioner Of Goods And Services Tax (Cgst), South Delhi & Anr., W.P.(C) 8061/2024; Akash Bansal (Proprietor M/S Shri Prem Ji Traders) V. Superintendent Range - 109 Central Goods And Services Tax Department, Delhi West, Division Rohini, 2025:DHC:6866-DB; and M/S Balaji Industries v. The Principal Commissioner CGST Delhi North Commissionerate & Anr., W.P.(C) 11913/2024. Revenue's Arguments: The judgment records no specific arguments from the Revenue or State.