M/S Cairo International And Ors vs. The Principal Commisisioner Department Of Trade And Taxes Govt Of Nct Of Delhi And Anr
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The petitioners, M/s Cairo International and others, filed a writ petition challenging an order dated March 31, 2023, which cancelled petitioner no.1's Goods and Services Tax (GST) registration retrospectively from July 1, 2017. This cancellation followed a Show Cause Notice (SCN) dated March 14, 2023, citing the reason that the principal place of business was not found/available during a field visit. The SCN also suspended the GST registration effective from March 14, 2023. The respondents argued that the principal place of business was attached by secured lenders under the SARFAESI Act on March 14, 2023, preventing the petitioner from carrying on business there and that no application for a change of business address was made. The petitioners countered that the premises were attached on the same date the SCN was issued.
Held
The Court held that the impugned order cancelling the GST registration retrospectively from July 1, 2017, was unsustainable. The Show Cause Notice (SCN) did not propose retrospective cancellation; it only cited the non-availability of the principal place of business during a field visit. The Court found that the respondents' contention regarding the attachment of the premises under the SARFAESI Act on March 14, 2023, could not justify a retrospective cancellation from July 1, 2017. Furthermore, the Court noted a violation of the principles of natural justice because no date or time was fixed for a personal hearing, meaning the petitioners were not afforded an opportunity to respond to the proposed retrospective cancellation. Consequently, the impugned order was set aside. The Court directed the petitioners to file a response to the SCN within two weeks, after which the proper officer would pass a reasoned order after granting an opportunity of being heard. The petitioners were also permitted to file an application for a change of their principal place of business, which would be considered on its merits.
Key Issues
1. Whether the impugned order cancelling the GST registration retrospectively from July 1, 2017, is sustainable when the SCN only cited the non-availability of the principal place of business on the date of the field visit and did not propose retrospective cancellation. (Section 29 of CGST Act, 2017) 2. Whether the petitioners were afforded an adequate opportunity of being heard before the cancellation of their GST registration, particularly concerning the retrospective effect. (Principles of Natural Justice) Petitioner's Arguments: The petitioners argued that the SCN did not propose retrospective cancellation and that the attachment of their premises under SARFAESI Act occurred on the same date as the SCN, making it impossible to have operated from there prior to that date. They also contended that no date or time was fixed for a personal hearing, thus violating principles of natural justice. Revenue's Arguments: The respondents submitted that the principal place of business was attached under the SARFAESI Act, and therefore, the petitioner could not claim to be carrying on business from that location. They also noted the absence of an application for a change of principal place of business.
Sections Cited
Section 29
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Cause title — parties, addresses and appearances
O R D E R % 12.09.2024
Issue notice.
The learned counsel appearing for the respondents accepts notice.
The petitioners has filed the present petition impugning an order dated 31.03.2023 (hereby the impugned order), whereby petitioner no.1’s Goods and Services Tax (GST) registration was cancelled with retrospective effect from 01.07.2017. The impugned order was passed pursuant to the Show Cause Notice dated 14.03.2023 (hereafter the impugned SCN), whereby petitioner no.1 was called upon to show cause why its registration not be cancelled.
The only reason set out in the impugned SCN reads as under:
“1. Principal place of business not found / available at the time of field visit.”
Petitioner no.1 was also called upon to respond to the impugned SCN within a period of seven working days from the date of service of the impugned SCN and to appear before the concerned officer on the appointed date and time. Additionally, petitioner no.1’s GST registration was suspended 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 30/09/2024 at 12:00:10
with effect from the date of the impugned SCN, that is with effect from 14.03.2023. 6. The learned counsel appearing for the respondents submits that petitioner no.1’s principal place of business was attached by the secured lenders under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter SARFAESI Act) and therefore, petitioner no.1 cannot claim that it is carrying on its business from its principal place of business. He also submits that petitioner no.1 has not made any application for change of its principal place of business.
The learned counsel appearing for the petitioners’ states that petitioner no.1’s premises was attached by the lenders on 14.03.2023, that is, on the same date on which the impugned SCN was issued to the petitioners.
It is seen that the impugned SCN does not propose the cancellation of petitioner no.1’s GST registration with retrospective effect from 01.07.2017. Plainly, if it is the respondents’ contention that petitioner no.1’s principal place of business has been attached by the secured lenders under the SARFAESI Act, on 14.03.2023, the same cannot lead to the conclusion that petitioner no.1 did not carry on its business from the said premises since inception.
It is also relevant to note that although the impugned SCN called upon the petitioner to appear for personal hearing before the proper officer, however, no date or time was fixed for personal hearing. Thus, in effect, the petitioners were also not afforded an opportunity of being heard.
In view of the above we set aside the impugned order as it has been passed in violation of the principles of natural justice. Clearly, petitioner no.1 had no opportunity to respond as to why its registration be not cancelled from 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 30/09/2024 at 12:00:10
a retrospective date.
The petitioners may file a response to the impugned SCN within a period of two weeks from date. The proper officer shall consider the same and pass a reasoned order after affording the petitioners an opportunity to be heard. In the meanwhile, the petitioners are also at liberty to file an application for change of its principal place of business, if petitioner no.1 continues to carry on its business. It is clarified that the said application will be considered on merits notwithstanding that petitioner no.1’s GST registration has been suspended with effect from 14.03.2023. 12. The petition is disposed of in the aforesaid terms. Pending application is also disposed of. VIBHU BAKHRU, J SACHIN DATTA, J SEPTEMBER 12, 2024 ‘gsr’ Click here to check corrigendum, if any 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 30/09/2024 at 12:00:10
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.