Nutech Appliances vs. Superintendent Range-35, Central Goods And Services Tax & Anr.
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The petitioner, Nutech Appliances, challenged an order dated 27.05.2023 by the Superintendent, Central Goods and Services Tax, cancelling its GST registration retrospectively from 22.04.2018. This cancellation followed a Show Cause Notice (SCN) dated 25.04.2023, which vaguely stated that registration was obtained by fraud, wilful misstatement, or suppression of facts. The petitioner's GST registration was suspended from 25.04.2023. Subsequently, the petitioner applied for revocation, which was initially delayed but the delay was condoned. A subsequent SCN dated 22.02.2024 proposed rejection of the revocation application, requiring KYC documents and an NOC from the Anti-Evasion branch. The revocation application was ultimately rejected by an order dated 16.04.2024.
Held
The Court held that both the Show Cause Notice (SCN) and the impugned order cancelling the petitioner's GST registration were unsustainable. The SCN failed to provide specific details regarding the alleged fraud, wilful misstatement, or suppression of facts, rendering it incapable of eliciting a meaningful response and thus violating the principles of natural justice. Furthermore, the impugned order cancelled the GST registration with retrospective effect from 22.04.2018, a ground not even proposed in the SCN. The Court found that the impugned order was passed in violation of the principles of natural justice. Consequently, the Court set aside the SCN and the impugned order, directing the respondents to restore the petitioner's GST registration forthwith. The Court clarified that this would not prevent the respondents from initiating fresh proceedings in accordance with law.
Key Issues
1. Whether the Show Cause Notice dated 25.04.2023, proposing cancellation of the petitioner's GST registration, was legally sustainable, given its lack of specific grounds, and thus whether it violated the principles of natural justice? The petitioner argued that the SCN was cryptic and did not provide specific details of fraud, misstatement, or suppression, making it impossible to respond meaningfully. The petitioner also contended that the requirement to obtain an NOC from the Anti-Evasion branch was not statutorily supported. The respondents did not record any specific arguments in response to these points. 2. Whether the impugned order dated 27.05.2023, cancelling the petitioner's GST registration retrospectively, was valid when the SCN did not propose retrospective cancellation and lacked specific grounds, thereby violating principles of natural justice? The petitioner argued that the impugned order was bereft of details and introduced retrospective cancellation not mentioned in the SCN.
Sections Cited
None explicitly mentioned in the judgment text provided.
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W.P. (C) 7455/2024 $~36 * IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of Decision: 13.08.2024
+ W.P.(C) 7455/2024
NUTECH APPLIANCES .....Petitioner Through: Mr Nitin Gulati and Ms Reena Gulati Advocates.
versus
SUPERINTENDENT RANGE-35, CENTRAL GOODS AND SERVICES TAX & ANR. .....Respondents Through: Mr Arnav Kumar, SCC and Mr Chetanya Kapoor, Advocates. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J. (ORAL)
The petitioner has filed the present petition, inter alia, impugning the order dated 27.05.2023 (hereafter the impugned order), whereby the petitioner’s Goods and Services Tax (GST) registration was cancelled with retrospective effect from 22.04.2018. 2. The impugned order was issued pursuant to the Show Cause Notice dated 25.04.2023 (hereafter the SCN). The only reason set out in the SCN proposing to cancel the petitioner’s GST registration reads as under:- “1 In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.”
The petitioner was called upon to reply to the SCN within seven working days from the date of the service of the SCN and was also directed W.P. (C) 7455/2024 to appear before the proper officer on 01.05.2023 at 03:00 PM. Additionally, the petitioner’s GST registration was suspended with effect from the date of issuance of the SCN, that is, with effect from 25.04.2023. 4. The petitioner, thereafter, applied for revocation of the petitioner’s GST registration in terms of an application dated 08.02.2024 and also sought condonation of delay in filing the same. The proper officer condoned the delay in filing the said application by an order dated 14.02.2024, however, thereafter, issued the Show Cause Notice dated 22.02.2024 stating that he has examined the application of the petitioner and found that the same was liable to be rejected. The reason set out for proposing to reject the said application of the petitioner reads as under:- “1.Reason for revocation of cancellation - Others (Please specify) - plz upload your KYC documents and join investigation with Anti Evasion branch of CGST Delhi North and get NOC from them.”
Thereafter, the petitioner’s application seeking revocation of the cancellation of the GST registration was rejected by an order dated 16.04.2024. 6. The learned counsel for the petitioner states that he has no objection to submitting his KYC documents and has done so before. However, he has not received the notice in respect of any other proceedings and the requirement to obtain a ‘No Objection Certificate’ (NOC) is not supported by any statutory provision.
It is apparent from the facts as noted above that the SCN did not specify any intelligible reason for proposing to cancel the petitioner’s GST
W.P. (C) 7455/2024 registration. Although, it is stated that the registration has been obtained by means of fraud, wilful misstatement or suppression of facts, it did not set out any particulars regarding fraud or indicate any statement, which was alleged to be a misstatement or provide any details of the facts, which were allegedly suppressed.
The purpose of a show cause notice is to enable the noticee to respond to the allegations. In the present case, since the SCN did not contain any specific details, it was incapable of eliciting any meaningful response. The SCN was cryptic and fails to meet the standards of a show cause notice.
The impugned order is also bereft of any details. It merely mentions that it is in reference to the SCN. It is important to note that the SCN did not propose cancellation of the petitioner’s GST registration with retrospective effect. However, the impugned order proceeded to cancel the petitioner’s GST registration with retrospective effect from 22.04.2018. 10. In view of the above, neither the SCN nor the impugned order cancelling the petitioner’s GST registration can be sustained. As is apparent from the above, the impugned order has been passed in violation of the principles of natural justice.
We, accordingly, set aside the SCN and the impugned order. The respondents are directed to restore the petitioner’s GST registration forthwith.
We clarify that this order will not preclude the respondents from initiating any proceedings against the petitioner including the proceedings
W.P. (C) 7455/2024 for cancelling the petitioner’s GST registration with retrospective effect or for any statutory violations, albeit, in accordance with law.
The petition is disposed of in the aforesaid terms.
VIBHU BAKHRU, J
SACHIN DATTA, J AUGUST 13, 2024 M
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