M/S. Mona Portfolio Limited vs. The Sales Tax Officer, New Delhi

Facts

The petitioner, M/s. Mona Portfolio Limited, challenged an order dated May 17, 2023, by the Sales Tax Officer, New Delhi, which cancelled its GST registration retrospectively from July 1, 2017. The cancellation followed a Show Cause Notice (SCN) dated November 30, 2022, alleging the petitioner was not functioning at its principal place of business. The petitioner claims to have shifted its principal place of business and informed the proper officer, providing a consent letter from the new premises owner and an electricity bill. However, the petitioner did not amend its registration and failed to provide the date of shifting or evidence of business operations at the old address prior to the shift. The petitioner contended it was not given an opportunity to address the retrospective cancellation.

Held

The Court held that there was merit in the petitioner's contention that it was not granted an adequate opportunity to address the retrospective cancellation of its GST registration, as this was not explicitly proposed in the Show Cause Notice. The Court found that the petitioner had attempted to inform the proper officer about its change of principal place of business and had provided some supporting documents. However, the Court also noted deficiencies in the petitioner's response, specifically the lack of clarity on the date of shifting and supporting evidence for business operations at the old address. Consequently, the Court set aside the impugned order and remanded the matter to the proper officer. The petitioner was granted two weeks to submit all relevant documents to demonstrate that it was conducting business from its declared principal place of business until a specified date and that it had shifted its principal place of business. The proper officer is to reconsider the case afresh after affording the petitioner an opportunity of hearing and, if satisfied, restore the registration to allow for statutory compliance regarding the amendment of the principal place of business. The ratio is that retrospective cancellation without specific notice and an opportunity to be heard on that specific ground violates natural justice, and procedural deficiencies by the assessee may warrant a remand for fresh consideration with proper documentation.

Key Issues

1. Whether the cancellation of the petitioner's GST registration with retrospective effect from July 1, 2017, is valid, considering the petitioner was not specifically put to notice of such a proposal in the Show Cause Notice (SCN)? (Mixed question of law and fact, concerning principles of natural justice and the scope of Section 29 of the CGST Act, 2017). Petitioner's arguments: The petitioner argued that the SCN did not propose retrospective cancellation, thus violating principles of natural justice as they were not afforded an opportunity to respond to this specific ground. They also contended they had informed the authorities about their change of principal place of business and provided supporting documents. Revenue's arguments: The respondent (Sales Tax Officer) argued that the petitioner failed to amend its registration and did not provide sufficient evidence regarding the date of shifting its principal place of business or proof of operations at the declared address prior to the shift. The judgment does not explicitly record arguments from the revenue regarding the retrospective cancellation itself, focusing more on the petitioner's procedural lapses.