Mangla Enterprises vs. Commissioner Of Delhi Goods And Services Tax & Ors.

Held

The Court held that the Show Cause Notice dated 18.11.2020 was defective as it failed to specify the date and time for the personal hearing. This defect rendered the subsequent order of cancellation unsustainable. Furthermore, the Court found that the impugned order dated 27.11.2020, cancelling the petitioner's registration, was passed without affording the petitioner a sufficient opportunity to be heard, which is a violation of natural justice principles. The Court acknowledged the mitigating circumstances presented by the petitioner, including illness and the prevailing COVID-19 pandemic, which prevented a timely response. Consequently, the Court set aside the Show Cause Notice, the order of cancellation, and the appellate order rejecting the appeal. The respondents were directed to restore the petitioner's GST registration within one week. The petitioner was directed to regularize their GST filings within four weeks thereafter. The Court clarified that this restoration would not prevent the respondents from initiating appropriate proceedings for recovery of any tax, interest, or penalty due.

Facts

The petitioner, Mangla Enterprises, filed a writ petition challenging a Show Cause Notice dated 18.11.2020 proposing cancellation of its GST registration and the subsequent order dated 27.11.2020 cancelling the registration. The reason for cancellation was non-filing of GST returns for six continuous months. The petitioner's appeal against the cancellation order was rejected on 22.08.2022 for being filed beyond the limitation period. The petitioner contended that the Show Cause Notice was defective as it did not specify the date and time for personal hearing. The petitioner also claimed to have been unwell and that the business had ceased functioning from March 2020, coinciding with the COVID-19 pandemic. The petitioner provided details of turnover, ITC availed, and tax paid for the years 2017-2020.

Key Issues

1. Whether the Show Cause Notice dated 18.11.2020, proposing cancellation of the petitioner's GST registration, is liable to be set aside for being defective, specifically for not indicating the date and time for personal hearing, as contemplated under the relevant provisions of the Goods and Services Tax Act, 2017? 2. Whether the order dated 27.11.2020, cancelling the petitioner's GST registration, is liable to be set aside for being passed without affording the petitioner a sufficient opportunity to be heard, considering the circumstances including the petitioner's illness and the ongoing COVID-19 pandemic? Petitioner's Arguments: The petitioner argued that the Show Cause Notice was fundamentally flawed due to the absence of a specified date and time for personal hearing, thus violating principles of natural justice. They further contended that the cancellation order was passed without a proper opportunity to be heard, especially given the mitigating circumstances of illness and the pandemic. The petitioner relied on the fact that their business had ceased operations from March 2020. Revenue's Arguments: The judgment does not record any specific arguments made by the respondents (Commissioner of Delhi Goods and Services Tax & Ors.).