M/S Hari Trading Through Its Proprietor Himanshu vs. Principal Commissioner Of Goods And Services Tax, East Delhi & Anr.
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The petitioner, M/s Hari Trading, filed a writ petition challenging a show cause notice (SCN) dated July 4, 2024, proposing cancellation of its GST registration. The SCN also suspended the petitioner's GST registration effective from the same date. The sole reason cited in the SCN was a violation of Rule 21(g) of the Central Goods and Services Tax Rules, 2017, specifically stating "person violates the provision of rule 86B". The petitioner contended that it was compliant with Rule 86B, having deposited 1% of tax on outward supplies and not discharging entire liabilities solely by availing input tax credit. The respondents acknowledged a technical glitch on the portal regarding the proper officer's designation and stated the SCN would be withdrawn once the glitch was resolved.
Held
The Court held that the impugned show cause notice (SCN) was unsustainable and required to be set aside. The Court observed that the SCN did not set out any intelligible reason for proposing the cancellation of the petitioner's GST registration, merely referencing the statutory provision that enables cancellation. It was found to be bereft of any details explaining how the petitioner had violated Rule 86B of the CGST Rules. The respondents' counsel admitted that the SCN was issued due to a technical glitch on the portal and that it would be withdrawn once resolved. Consequently, the Court directed that the petitioner's GST registration be restored forthwith. The Court clarified that this order would not prevent the respondents from initiating statutory proceedings for violations or recovery of dues, provided they were in accordance with the law.
Key Issues
1. Whether the impugned show cause notice dated 04.07.2024, proposing cancellation of the petitioner's GST registration, is legally sustainable, considering it lacks specific reasons for the alleged violation of Rule 86B of the CGST Rules, 2017? Petitioner's Contention: The petitioner argued that the SCN was unsustainable as it merely cited a statutory provision (Rule 21(g) read with Rule 86B) without providing any details or grounds for the alleged violation. The petitioner asserted its compliance with Rule 86B, stating it had deposited 1% tax on outward supplies and did not solely rely on input tax credit for discharging liabilities. Respondents' Contention: The respondents admitted that the SCN was issued due to a technical glitch on the portal, which incorrectly reflected the proper officer. They stated that a 'ticket' had been raised to resolve this issue and that the impugned SCN would be withdrawn upon resolution of the glitch.
Sections Cited
Rule 21(g), Rule 86B
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Cause title — parties, addresses and appearances
O R D E R %
2024
The petitioner has filed the present petition inter alia impugning the show cause notice dated 04.07.2024 (hereinafter the impugned SCN), whereby the petitioner was called upon to show cause as to why its GST registration not be cancelled. The petitioner‟s GST registration was also suspended with effect from the date of the impugned SCN, that is, with effect from 04.07.2024. The only reason set out in the impugned show cause notice reads as “Rule 21(g)-person violates the provision of rule 86B”.
The learned counsel for the petitioner submits that it is fully compliant with Rule 86B of the Central Goods and Services Tax Rules, 2017 (hereinafter the CGST Rules). He states that the petitioner has not discharged its entire liabilities by availing input tax credit and has deposited 1% tax on outward supplies. 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 08:51:51
Undisputedly, the impugned SCN does not set out any intelligible reason for cancelling the petitioner‟s GST registration. It merely notes the statutory provision, which enables the proper officer to cancel the taxpayer‟s GST registration.
The impugned SCN is bereft of any details as to how the petitioner has violated Rule 86B of the CGST Rules.
Mr. Singla, the learned counsel appearing for the respondents submits that there is a technical glitch as the portal reflected the proper officer as a State Officer. He submits that a „ticket‟ has been raised and as soon as the glitch is resolved, the impugned SCN shall be withdrawn.
It is, thus, apparent that the impugned SCN is required to be set aside. It is accordingly so directed. The petitioner‟s GST registration is directed to be restored forthwith.
We clarify that this would not preclude the respondents from initiating any proceedings for statutory violation or for recovery of dues, if warranted, albeit in accordance with law.
The present petition is disposed of in the aforesaid terms.
VIBHU BAKHRU, J
SACHIN DATTA, J SEPTEMBER 12, 2024 r
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 08:51:51
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.