M/S Birchand vs. Commissioner Of Dgst, Delhi And Others
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The petitioner, M/s Birchhand, challenges an order dated April 19, 2024, by the Appellate Authority under Section 107 of the CGST Act/DGST Act, which rejected its appeal against an order dated December 30, 2021, cancelling its GST registration. The petitioner's GST registration was cancelled due to discrepancies and failure to respond to a notice dated January 27, 2021. A Show Cause Notice (SCN) dated March 16, 2021, was issued, citing "REPLY OF ASMT-10 NOT YET FILED/RECEIVED" as the reason for proposed cancellation. The petitioner claims this SCN escaped its attention and that no date for personal hearing was specified, thus denying an opportunity to be heard. The registration was suspended from March 16, 2021, and subsequently cancelled retrospectively from July 15, 2017, without any adverse action being proposed in the SCN or reasons provided for retrospective cancellation. The petitioner's appeal to the Appellate Authority was dismissed for being filed beyond the limitation period, despite the Supreme Court's condonation of delays during the COVID-19 pandemic.
Held
The Court held that the petitioner was not granted a real opportunity of being heard as the impugned Show Cause Notice (SCN) did not specify any date or time for personal hearing. This procedural lapse violated the principles of natural justice. The Court also noted that the cancellation of GST registration with retrospective effect was not proposed in the SCN and no reasons were provided for such retrospective cancellation in the impugned cancellation order. Consequently, the Court found it appropriate to set aside the impugned order of the Appellate Authority. The matter was remanded to the Appellate Authority to decide the petitioner's appeal afresh on merits, uninfluenced by the question of delay, and after affording the petitioner an opportunity of personal hearing. The Appellate Authority was requested to dispose of the appeal expeditiously, preferably within eight weeks.
Key Issues
1. Whether the petitioner was denied a reasonable opportunity of being heard prior to the cancellation of its GST registration, as required by law? (Question of law and fact, turning on principles of natural justice and the provisions governing show cause notices and personal hearings under the CGST/DGST Act). 2. Whether the Appellate Authority erred in not entertaining the petitioner's appeal on merits, considering the Supreme Court's directions regarding the condonation of delay during the COVID-19 pandemic? (Question of law, turning on the interpretation and application of Supreme Court orders and the provisions governing appeals under the CGST/DGST Act). Petitioner's Arguments: The petitioner argued that the impugned SCN did not specify any date or time for personal hearing, thus denying them a real opportunity to be heard. They also contended that the cancellation of registration with retrospective effect was not proposed in the SCN and lacked justification. Furthermore, the petitioner asserted that their appeal was not entertained by the Appellate Authority solely on the ground of delay, overlooking the Supreme Court's orders condoning delays during the pandemic. Revenue's Arguments: The judgment does not record any specific arguments made by the respondent revenue authorities.
Sections Cited
Section 107, Section 16(2)(b)
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W.P. (C) 9518/2024 $~53 * IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of Decision : 15.07.2024
+ W.P.(C) 9518/2024
M/S BIRCHAND
.....Petitioner
Through: Mr.Sanjeev, Advocate.
versus
COMMISSIONER OF DGST, DELHI AND OTHERS .....Respondent Through: Mr.Aviskar Singhvi, ASC, Mr.Shubham Kumar, Mr.Vivek Kumar Singh, and Mr.Naved Ahmed, Advocates.
CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J. (ORAL)
Issue notice. The learned counsel for the respondent accepts notice.
The petitioner has filed the present petition impugning the order dated 19.04.2024 (hereafter the impugned order)passed by the Appellate Authority under Section 107 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) / the Delhi Goods and Services Tax Act, 2017 (hereafter the DGST Act) whereby the petitioner’s appeal against the order dated 30.12.2021 (hereafter the impugned cancellation order) cancelling its GST Registration, was rejected. W.P. (C) 9518/2024 3. The petitioner was carrying on business since prior to the roll out of the CGST regime with effect from 01.07.2017. Accordingly, he migrated to the said regime and was assigned the Goods and Services Tax Identification (GSTIN) – No. 07AFAPC2167H1ZV, with effect from 01.07.2017. 4. The respondents found discrepancies in the returns filed by the petitioner and issued notice dated 27.01.2021. However, the petitioner states that the same escaped its attention and it did not respond to said notice. In view of the above, the Proper Officer proposed to take steps to cancel the petitioner’s GST registration. Accordingly, the Proper Officer issued the Show Cause Notice dated 16.03.2021 (hereafter the impugned SCN) calling upon the petitioner to show cause as to why its GST registration number be not cancelled. The reason for proposing cancellation of the petitioner’s GST registration as set out in the impugned SCN reads as: “REPLY OF ASMT- 10 NOT YET FILED/RECEIVED”. The petitioner was called upon to response to the impugned SCN within a period of seven working days. The petitioner’s GST registration was suspended with effect from the date of the impugned SCN – 16.03.2021. 5. It is relevant to note that the petitioner was also put to notice that if he failed to furnish the reply within the stipulated period or failed to appear for personal hearing on the appointed date and time, the case would be decided ex parte on the basis of available record and on merits. However, the impugned SCN did not specify any appointed date or time of the personal hearing. Thus, undisputedly, the petitioner was not granted any real opportunity of being heard.
W.P. (C) 9518/2024 6. The petitioner did not respond to the impugned SCN and consequently, the petitioner’s GST registration was cancelled by the impugned cancellation order with retrospective effect from 15.07.2017. 7. The tabular statement, as set out in the impugned cancellation order, indicates that no tax was determined to be due and payable by the petitioner.
The petitioner claims that it did not receive any physical notice and had not viewed the GST portal. The petitioner also states that during the said period his business was disrupted on account of the COVID-19 pandemic.
The petitioner preferred an appeal against the impugned cancellation order before the Appellate Authority on 09.09.2022, however the same was not entertained as it was filed after the expiry of the stipulated period for filling such appeals.
It is relevant to note that the Supreme Court in Suo Motu Writ Petition (C) No.3/2020 IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION had condoned the delay in cases where the period of limitation expired prior to 28.02.2022. 11. It is material to note that the GST registration of the petitioner was cancelled by the impugned cancellation order with retrospective effect, however, no adverse action to the said effect was proposed in the impugned SCN. The impugned cancellation order also does not set out any reason for cancelling the petitioner’s GST registration with retrospective effect.
In view of the above, in the peculiar facts of the case, we consider it apposite to set aside the impugned order and remand the matter to the
W.P. (C) 9518/2024 Appellate Authority to decide the petitioner’s appeal afresh on merits, uninfluenced by the question of delay, after affording an opportunity of personal hearing to the petitioner.
We request the Appellate Authority to dispose of the appeal as expeditiously as possible, preferably within a period of eight weeks from date.
The petition stands disposed of in the above terms.
VIBHU BAKHRU, J
SACHIN DATTA, J JULY 15, 2024 M
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