Sandeep Kumar vs. Commissioner, Department Of Trade And Taxes, Govt. Of Nct Of Delhi
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The petitioner, Sandeep Kumar, filed a writ petition challenging an order dated 12 September 2024, which rejected his application for cancellation of GST registration. This order was passed by the Sales Tax Officer. On the same date, a Show Cause Notice (SCN) was issued alleging breach of Rule 21(a) of the CGST Rules, 2017, as the petitioner was found not to have conducted business from the declared place during a field survey on 01 September 2024. The petitioner's application for cancellation was made on 22 August 2024. The High Court noted that the order rejecting the cancellation application treated it as a reply to the SCN, which was factually incorrect and lacked reasoning.
Held
The Court held that the order dated 12 September 2024 rejecting the petitioner's application for cancellation of registration was unsustainable. The primary reason was that the order erroneously treated the petitioner's voluntary application for cancellation as a reply to the Show Cause Notice (SCN) issued on the same date, which was factually incorrect. Additionally, the order failed to provide any reasons for not examining the application for cancellation. Consequently, the SCN was also deemed unsustainable because it was issued after the petitioner had already applied for voluntary cancellation, and there was an apparent inconsistency in the respondent's stand regarding the procedure for cancellation, particularly in light of their own Circular dated 26 October 2018. The Court quashed both the order of rejection and the SCN. The Court directed that the petitioner's application for cancellation of registration dated 22 August 2024 be examined afresh in accordance with the law. All contentions of both parties, including the alleged violation of Rule 21(a) by the respondent, were kept open for examination in the fresh proceedings.
Key Issues
1. Whether the order rejecting the petitioner's application for cancellation of GST registration is sustainable, given that it was treated as a reply to a Show Cause Notice issued on the same date and lacked proper reasoning? (Question of law and fact, concerning principles of natural justice and procedural fairness). 2. Whether the Show Cause Notice issued to the petitioner is sustainable, considering it was issued after the petitioner had already applied for voluntary cancellation of registration and in light of the respondent's own Circular dated 26 October 2018, which allegedly mandates shutting down the business place before applying for cancellation? (Question of law, concerning interpretation of statutory provisions and administrative circulars). Petitioner's arguments: The petitioner contended that the order rejecting the cancellation application was procedurally flawed as it was erroneously treated as a response to the SCN and failed to provide any reasons for non-examination. Furthermore, the SCN was unsustainable as it was issued post-application for cancellation, and the respondent's own circular required business closure prior to such an application. Respondent's arguments: The respondent's counsel conceded to the issues and suggested setting aside the impugned order to allow the respondents to proceed afresh.
Sections Cited
Rule 21(a)
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Cause title — parties, addresses and appearances
O R D E R
CM APPL. 61431/2024 (Ex.)
Allowed, subject to all just exceptions.
The application stands disposed of.
The writ petitioner impugns the order dated 12 September 2024 pursuant to which its application for cancellation of registration came to be rejected as also a Show Cause Notice W.P.(C) 14631/2024 1
The order proceeds to reject an application which the petitioner had made seeking cancellation of its registration under the Central of the same date issued by the Sales Tax Officer.
1 SCN 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 22:43:49
Goods and Services Act, 20172
The SCN came to be issued on the same date as the order of rejection, and alleges that the petitioner was in breach of Rule 21(a) of the Central Goods and Services Tax Rules, 2017 . That application had been made way back on 22 August 2024 and also appears to have been preceded by the respondents undertaking a field survey on 01 September 2024. 3
We find that the final order rejecting the voluntary application for cancellation made by petitioner proceeds on the premise as if the same was a reply to the SCN which had come to be issued. This clearly is factually incorrect. Even otherwise, the order fails to assign any reason which would have merited the application seeking cancellation of registration not being examined. The order is thus rendered unsustainable on the aforesaid short ground alone. since it had been found in the course of that field visit that he had not conducted any business from the declared place.
Insofar as the SCN is concerned, suffice it to note that the same came to be issued after the petitioner had already voluntarily applied for cancellation of its registration. Learned counsel of the petitioner, draws our attention to the Circular of the respondents itself dated 26 October 2018 and in terms of which it is contended that the petitioner was statutorily obliged to shut down its place of business before applying for cancellation of registration.
In view of the aforesaid inconsistency in the stand which has been taken by the respondents, it becomes evident that the SCN impugned herein would not sustain.
Faced with the aforesaid tentative conclusions, Mr. Aggarwal,
2 Act 3 Rules 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 22:43:49
learned counsel for the respondent, submitted that rather than the petition being retained on the board of this Court, the ends of justice would warrant the impugned order being set aside with liberty to the respondents to proceed in the matter afresh.
Accordingly, and for all the aforesaid reasons, we quash the order of cancellation dated 12 September 2024 as well as the SCN of even date.
The application of the petitioner dated 22 August 2024 for cancellation of registration may be examined afresh and in accordance with law. All rights and contentions of respective parties, including those of the respondents who have alleged a purported violation of Rule 21(a) are kept open to be examined in those proceedings.
The writ petition shall stand disposed of on the above terms.
YASHWANT VARMA, J
RAVINDER DUDEJA, J OCTOBER 21, 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 03/07/2025 at 22:43:49
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.