Anup Sharma vs. Avato Ward 63 State Goods And Service Tax & Anr.
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The petitioner, Anup Sharma, filed a writ petition challenging a show cause notice (SCN) dated July 4, 2024, issued by the proper officer proposing to cancel his Goods and Service Tax (GST) registration. The SCN cited Rule 21(b) of the Central Goods and Services Tax Rules, 2017, stating the petitioner issued invoices without the supply of goods or services. The petitioner was required to reply within seven working days and appear on July 11, 2024. His GST registration was suspended effective July 4, 2024. The petitioner submitted a reply on July 5, 2024, arguing the SCN was cryptic, lacked specific allegations, and did not name the issuing officer. He also noted that over a month had passed since his reply without a decision, while his registration remained suspended.
Held
The Court held that the impugned show cause notice (SCN) was liable to be set aside. The Court found that the SCN failed to meet the requisite standards for a valid show cause notice. Specifically, it did not provide any specific reasons or details as to which invoice or bill was allegedly issued by the petitioner without the supply of goods or services. The SCN merely reproduced Rule 21(b) of the CGST Rules without any supporting documents or clues to substantiate the allegation. The Court reasoned that the purpose of an SCN is to enable the noticee to respond to the allegations, and without specific allegations, the notice becomes meaningless. Therefore, the SCN was set aside, and the respondents were directed to restore the petitioner's GST registration forthwith. The Court clarified that this order would not prevent the proper officer from initiating fresh proceedings if warranted, in accordance with the law.
Key Issues
1. Whether the show cause notice dated 04.07.2024, proposing cancellation of the petitioner's GST registration under Rule 21(b) of the CGST Rules, is legally sustainable in the absence of specific allegations regarding the issuance of invoices without supply of goods or services? Petitioner's arguments: The petitioner contended that the impugned SCN was cryptic and failed to provide specific details of any invoice or bill allegedly issued without the supply of goods or services. He argued that the SCN merely reproduced the relevant rule (Rule 21(b)) without substantiating the allegation. Furthermore, the petitioner pointed out that the SCN did not mention the name and designation of the issuing officer. He also highlighted the delay in decision-making after submitting his reply and the continued suspension of his GST registration. Revenue's arguments: The judgment records no specific arguments made by the respondents (State Goods and Service Tax & Anr.).
Sections Cited
Rule 21(b)
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W.P. (C) 10984/2024 $~122 * IN THE HIGH COURT OF DELHI AT NEW DELHI %
Date of Decision : 08.08.2024 + W.P.(C) 10984/2024 & CM APPL. 45323/2024
ANUP SHARMA .....Petitioner Through: Mr Anurag Rajput, Mr Sahib Rajput, Mr Dhruv Bhardwaj, Ms Parul Bisht, Ms Priyavansh Kaushik, Mr Alekh, Ms Varsha and Ms Jadkirat Kaur, Advocates..
versus
AVATO WARD 63 STATE GOODS AND SERVICE TAX & ANR. .....Respondents Through: Mr.Rajeev Aggarwal, ASC and Mr.Shubham Goel, Advocate. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J. (ORAL)
Issue notice.
The learned counsel for the respondents accept notice.
The petitioner has filed the present petition impugning the show cause notice dated 04.07.2024 (hereafter the impugned SCN) issued by the proper officer calling upon the petitioner to show cause as to why his Goods and Service Tax (GST) registration not be cancelled.
The only reason set out in the impugned SCN for proposing to cancel the petitioner’s GST registration reads as under:- “1. Rule 21 (b)- person issues invoice or bill without supply of goods or services or both in W.P. (C) 10984/2024 violation of the provisions of the Act, or the rules made thereunder.”
The petitioner was also called upon to file a reply to the impugned SCN within seven working days from the date of service of the notice and was also directed to appear before the proper officer on 11.07.2024. Additionally, the petitioner’s GST registration was suspended with effect from 04.07.2024, being the date of the impugned SCN.
The petitioner submitted his reply to the impugned SCN on 05.07.2024 stating that the impugned SCN is cryptic and no specific allegations as to which bill or invoice was issued without the supply of goods or services or both have been mentioned. The petitioner has also raised an objection to the impugned SCN on the ground that no name and designation of the officer is mentioned in the impugned SCN.
It is contended that one month has elapsed after the reply was submitted by the petitioner, yet no decision has been taken on the impugned SCN. In the meanwhile, by virtue of the impugned SCN, the petitioner’s GST registration remain suspended. The petitioner is essentially aggrieved by the same.
It is apparent from the impugned SCN that the same does not provide any specific reason for proposing to cancel the petitioner’s GST registration. The impugned SCN has merely reproduced Rule 21(b) of the Central Goods and Services Tax Rules, 2017 (hereafter the CGST Rules). The impugned SCN also does not indicate as to which bill or transaction is alleged to be in non-compliance of the statutory provisions.
Although, Rule 21(b) of the CGST Rules provides for the cancellation
W.P. (C) 10984/2024 of the GST registration in case the tax payer issues the invoice or bill without the supply of goods or services in violation of the provisions of the CGST Act. However, the Proper Officer has failed to specify as to which invoice / bill has been allegedly issued by the petitioner without the supply of goods or services. No document is annexed with the impugned SCN which provides any clue as to which allegation is sought to be raised.
The purpose of issuance of the show cause notice is to enable the noticee to respond to the allegations on the basis of which an adverse action is premised. Absent of any specific allegations, the issuance of the show cause notice remains meaningless.
In the present case, the impugned SCN fails to meet the requisite standards of the show cause notice. Thus, the impugned SCN is liable to be set aside.
Accordingly, the present petition is allowed. The impugned SCN is set aside. The respondents are directed to restore the petitioner’s GST registration forthwith. It is clarified that this order will not preclude the proper officer from initiating any fresh proceedings, if warranted, in accordance with law.
Pending application also stands disposed of.
VIBHU BAKHRU, J
SACHIN DATTA, J AUGUST 08, 2024 M
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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.