M/S Baba International Through Partner Sh Riyaz Khan vs. Pr Commissioner CGST Delhi, North Commissionerate Delhi
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The petitioner, M/s Baba International, challenged the cancellation of its GST registration via an order dated 29 May 2024. This order followed a show cause notice dated 14 May 2024, which alleged contravention of Section 29(2)(e) of the CGST Act, 2017, due to fraud, willful misstatement, and suppression of facts. The impugned order, however, failed to provide specific details supporting these allegations. Notably, the order declared the effective date of cancellation as 31 May 2018, a retrospective date not foreshadowed in the show cause notice. The petitioner sought the cancellation to be effective from the date of the show cause notice. The respondent attempted to justify the action by referencing a separate show cause notice, but the allegations in that notice were not reflected in the impugned order.
Held
The Court held that the impugned order cancelling the petitioner's GST registration was unsustainable due to a lack of specific reasons and details supporting the allegations of fraud, willful misstatement, and suppression of facts. The Court emphasized that such serious allegations require substantiation and cannot be treated as mere incantations. Furthermore, the Court found the retrospective cancellation of registration effective from 31 May 2018 to be invalid, as it was not adequately supported by valid reasons disclosed and recorded, and was not indicated in the original show cause notice. The Court relied on its previous decision in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. The Court allowed the writ petition, setting aside the order dated 29 May 2024 insofar as it purported to take effect from 31 May 2018. The cancellation order was made effective from 14 May 2024. Any other allegations meriting further inquiry were left open to be pursued independently. The Court expressly left open all rights and contentions of the parties regarding any proposed future action.
Key Issues
1. Whether the order cancelling the petitioner's GST registration is sustainable in law, given the lack of specific reasons and details supporting the allegations of fraud, willful misstatement, and suppression of facts, as required by Section 29(2)(e) of the CGST Act, 2017? Petitioner's argument: The petitioner contended that the show cause notice and the subsequent cancellation order were vague and lacked specific details to substantiate the serious allegations of fraud, willful misstatement, and suppression of facts. They argued that these allegations are not mere incantations and require concrete evidence. Furthermore, the petitioner argued that the retrospective cancellation effective from 31 May 2018 was unsustainable, especially since it was not indicated in the show cause notice, citing the precedent in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. Respondent's argument: The respondent attempted to justify the impugned action by referring to a separate show cause notice, but the Court noted that the allegations in that document were not mirrored in the show cause notice or the order that led to the cancellation.
Sections Cited
Section 29(2)(e), Section 39(1)
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Cause title — parties, addresses and appearances
O R D E R
The writ petitioner seeks to assail the cancellation of its GST registration in terms of an order dated 29 May 2024. The aforesaid order was preceded by a show cause notice dated 14 May 2024 and in which it was alleged that the petitioner had contravened Section 29(2)(e) of the CGST Act, 2017 by having obtained the registration by practice of fraud, willful misstatement and suppression of facts.
Apart from this general recital which appears in the show cause notice, no further details were provided. Ultimately, the impugned final order of 29 May 2024 came to be passed and which reads as follows:- “Form GST REG-19 [See rule 22 (3)] Reference Number: ZA070524243901M Date: 29/05/2024
To BABA INTERNATIONAL 803,Third Floor,Pan Mandi,New Delhi,Central Delhi,Delhi,110006 GSTIN/ UIN :07AASFB1417E1ZO Application Reference Number (ARN): AA070524045240N Date:
Order for Cancellation of Registration This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 07:28:46
This has reference to show cause notice issued dated 14/05/2024. The effective date of cancellation of your registration is 31/05/2018. 3. It may be noted that a registered person furnishing return under sub-section (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order.
You are required to furnish all your pending returns.
It may be noted that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. Place: RANGE - 21 Date: 29/05/2024 Shyam Nandan Kumar Superintendent Ward 30”
As is manifest from a bare perusal of that order, the same fails to record or assign any reasons. Fraud, willful misstatement and suppression of fact have a well-known connotation in law. They are not mere incantations which would warrant adverse action absent any details to support those allegations.
Quite apart from the above, the effective date of cancellation has been prescribed to be 31 May 2018. It becomes relevant to note that even the original show cause notice had not placed the petitioner on notice of a proposed retrospective cancellation. We in this regard take note of our decision in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi & Anr. [W.P.C 8061/2024 dated 25 September 2024] where we had held that the mere existence of a power to retrospectively cancel would not This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 07:28:46
justify such a recourse being taken except for valid reasons which are duly disclosed and recorded. In view of the aforesaid, we find ourselves unable to sustain the order impugned. We also take note of prayer (d) which is made in the writ petition, and which essentially seeks cancellation from the date from when the show cause notice came to be issued. It is this prayer which was reiterated by learned counsel appearing for the writ petitioner before us.
Although learned counsel appearing for the respondent had sought to justify the impugned action by referring to a separate show cause notice which is alleged to have been issued, we find that the allegations leveled in that document do not stand mirrored in the show cause notice or the order which ultimately proceeded to cancel the registration of the writ petitioner.
In view of the above, we allow the instant writ petition and set aside the order dated 29 May 2024 insofar as it purports to take effect from 31 May 2018. The order shall be effective from 14 May 2024. Any other allegation which merits further inquiry or action under the Act is left open to be pursued independently and in accordance with law.
All rights and contentions of respective parties in respect of such proposed action are kept open.
YASHWANT VARMA, J.
RAVINDER DUDEJA, J. OCTOBER 7, 2024/neha
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 07:28:46
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.