M/S Shri Rani Sati Traders vs. Principal Commissioner Of Department Of Trade And Taxes, Government Of Nct Of Delhi

Facts

The petitioner, M/s Shri Rani Sati Traders, filed a writ petition challenging a show cause notice (SCN) dated June 12, 2024, proposing to cancel its GST registration. The petitioner was also aggrieved by the suspension of its GST registration effective from the same date. The sole reason cited in the SCN was a reference to Memo No. 751 dated June 10, 2024, received from the Deputy Commissioner of State Tax, Jhajjar. The petitioner contended that this memo was not attached to the SCN and was not available on its GST portal, rendering it unaware of the grounds for cancellation. Furthermore, the SCN failed to specify a date and time for the personal hearing, despite mentioning that the case would be decided ex-parte if the petitioner failed to appear.

Held

The Court held that the impugned show cause notice (SCN) dated June 12, 2024, was unsustainable and liable to be set aside. Regarding the first issue, the Court found that the SCN's sole basis was Memo No. 751 dated June 10, 2024, which was not attached to the notice and was not available to the petitioner. This lack of essential information rendered the notice incapable of eliciting a proper response. Concerning the second issue, the Court noted that while the SCN mentioned the possibility of an ex-parte decision if the petitioner failed to appear for a personal hearing, it did not specify any date or time for such a hearing. This omission deprived the petitioner of a meaningful opportunity to be heard. The Court concluded that the SCN was issued without application of mind and did not meet the required standards for a show cause notice. Consequently, the Court set aside the SCN and directed the restoration of the petitioner's GST registration forthwith. The Court clarified that this order would not prevent the respondent from initiating fresh proceedings in accordance with the law. All contentions of the parties were reserved.

Key Issues

1. Whether the impugned show cause notice dated June 12, 2024, is legally sustainable, considering it fails to provide the petitioner with the specific reasons for proposing the cancellation of its GST registration, specifically by not attaching the referenced Memo No. 751 dated June 10, 2024? (Question of law) 2. Whether the impugned show cause notice dated June 12, 2024, is legally sustainable, considering it fails to specify a date and time for the personal hearing, thereby denying the petitioner a meaningful opportunity to be heard? (Question of law) Petitioner's Arguments: The petitioner argued that the SCN was incapable of eliciting a response as the crucial Memo No. 751, which formed the sole basis for the proposed cancellation, was not provided. The absence of this memo, and its unavailability on the GST portal, meant the petitioner was unaware of the allegations. Additionally, the failure to mention a date and time for the personal hearing rendered the opportunity for a hearing illusory. The petitioner contended that the SCN was issued without application of mind. Respondent's Arguments: The respondent's counsel accepted notice, but no specific arguments were recorded in the judgment regarding the validity of the SCN.