M/S H S Traders vs. Principal Commissioner Of Central Goods And Services Tax, East Delhi
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The petitioner, M/s H S Traders, is challenging a final order dated July 10, 2024, which rejected its application for revocation of GST registration cancellation. The registration was initially cancelled retrospectively from September 25, 2022, by an order dated July 18, 2023. The petitioner filed an application for revocation on September 26, 2023. The respondent condoned the delay in filing this application on May 22, 2024, and subsequently issued a Show Cause Notice (SCN) on May 27, 2024. The SCN stated that the application was liable to be rejected because the reason provided for revocation was not considered "appropriate." The petitioner was directed to reply within seven working days and appear for a personal hearing on May 29, 2024. The final order rejecting the revocation application was passed on July 10, 2024.
Held
The Court held that the Show Cause Notice (SCN) dated May 27, 2024, was ex facie cryptic and lacked specific reasons for proposing the rejection of the petitioner's application for revocation of GST registration cancellation. The only reason stated was that the petitioner's provided reason was not considered "appropriate," which was insufficient to inform the petitioner of the grounds for rejection. Consequently, the Court found the petitioner's failure to respond to this SCN to be irrelevant and otiose. The Court quashed the final order dated July 10, 2024, and revived the petitioner's application for revocation of cancellation dated September 26, 2023. The respondent was directed to examine the application afresh and dispose of it in accordance with the law. All rights and contentions of the parties on merits were kept open.
Key Issues
1. Whether the Show Cause Notice dated May 27, 2024, issued by the respondent, was sufficiently reasoned and compliant with principles of natural justice, particularly concerning the rejection of the petitioner's application for revocation of GST registration cancellation, as required by Rule 23(3) of the CGST Rules? The petitioner argued that the SCN was cryptic and devoid of specific reasons, merely stating that the petitioner's reason for revocation was not "appropriate." This lack of detail rendered the SCN compliant with the requirement to provide reasons for the proposed rejection, making the subsequent failure to respond by the petitioner irrelevant. The petitioner contended that the final order, based on such a flawed SCN, was unsustainable. The respondent did not record any arguments in the judgment.
Sections Cited
Rule 23(3)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R %
2024
CM APPL. 65150/2024 (Ex.)
Allowed, subject to all just exceptions.
The application stands disposed of. W.P.(C) 15515/2024
The writ petitioner is aggrieved by the final order dated 10 July 2024 pursuant to which its application for revocation of cancellation of registration has come to be rejected. The record would reflect that the registration had come to be cancelled by way of an order dated 18 July 2023 with retrospective effect from 25 September 2022. The petitioner had thereafter moved an application seeking revocation of that cancellation on 26 September 2023. 2. By way of an order dated 22 May 2024, the respondent had proceeded to condone the delay which had been caused in the preferment of the revocation application. This was followed by the 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 18/11/2024 at 12:24:44
issuance of a Show Cause Notice [“SCN”] dated 27 May 2024 which reads thus: “Form GST REG-23 [See Rule 23(3)]
Reference Number: ZA070524229283M Date: 27/05/2024
To JAVED ALI G/F, HOUSE NO J-2, JAMIA NAGAR, ABUL FAZAL ENCLAVE PART], New Delhi, THOKAR NO 4, South East Delhi, Delhi, 110025 GSTIN: 07EIEPA1225B1Z5 Application Reference Number (ARN): AA0709230685800 Date: 26/09/2023
Show Cause Notice for rejection of application for revocation of cancellation of registration
This has reference to your application dated 26/09/2023 regarding revocation of cancellation of registration. Your application has been examined and the same is liable to be rejected for the following reasons:
1 Reason for revocation of cancellation - Reason for revocation of cancellation - The reason entered for revocation of cancellation is not appropriate.
You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
You are hereby directed to appear before the undersigned on 29/05/2024 at 15:40
If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.
Kindly refer the supportive document attached for case specific details.”
It is thereafter that the final order of cancellation has come to be passed on 10 July 2024. 3. As we view the SCN which preceded the passing of the order impugned, we find that the only reason that stood recorded therein was that the respondents had not found the reasons disclosed as being 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 18/11/2024 at 12:24:44
“appropriate”. It is thus ex facie evident that the SCN was wholly cryptic and devoid of any reasons which may have weighed upon the respondents to come to the conclusion that the reason disclosed by the writ petitioner for cancellation of revocation was not found appropriate.
Viewed in that light, it is manifest that the failure on the part of the petitioner to have failed to file a response to that SCN was clearly irrelevant and otiose. We consequently and for all the aforesaid reasons, find ourselves unable to sustain the final order of rejection.
We, accordingly, allow the present writ petition and quash the order of 10 July 2024. The application for revocation of cancellation dated 26 September 2023 shall consequently stand revived to be examined by the respondent afresh and disposed of in accordance with law.
All rights and contentions of respective parties on merits are kept open.
YASHWANT VARMA, J.
RAVINDER DUDEJA, J. NOVEMBER 07, 2024/RW 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 18/11/2024 at 12:24:44
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.