M/S Singh Trading Co vs. Sales Tax Officer Class Ii / Avato, Ward 79 Zone 7 Delhi
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The petitioner, M/s Singh Trading Co., challenged an order dated 19.09.2023, which cancelled its GST registration. This cancellation followed a show cause notice dated 20.07.2023, citing information from the Additional Commissioner of State Tax-1 (Inv) regarding the firm's alleged involvement in a "big scam of evasion of tax." The petitioner claims it did not receive a copy of the referenced letter from the Additional Commissioner, nor any further information. It also states the show cause notice did not specify a date, time, or venue for appearance. The respondents conceded that the material supporting the allegations of tax evasion was not provided to the petitioner.
Held
The Court held that the impugned order dated 19.09.2023, cancelling the petitioner's GST registration, was set aside. The reasoning was based on the conceded fact that the material supporting the allegations of tax evasion, which formed the basis of the show cause notice, was not furnished to the petitioner. This failure to provide the supporting material violated the principles of natural justice, as it prevented the petitioner from effectively responding to the allegations. The Court directed the Proper Officer to furnish all supporting material to the petitioner within one week. Subsequently, the petitioner was granted one week to file a reply, and the Proper Officer was directed to re-adjudicate the show cause notice within two weeks, after providing an opportunity for a personal hearing. The ratio decidendi is that a cancellation order based on allegations without providing the supporting evidence to the assessee is unsustainable in law.
Key Issues
1. Whether the cancellation of the petitioner's GST registration was vitiated due to the non-furnishing of material relied upon in the show cause notice, thereby violating principles of natural justice? (Question of law and fact, potentially turning on principles of natural justice and procedural fairness under GST law). Petitioner's arguments: The petitioner contended that the cancellation order was bad in law because the material forming the basis of the show cause notice was not supplied. They argued that the show cause notice itself was deficient as it did not provide a date, time, or venue for appearance, and the referenced letter from the Additional Commissioner was not shared. This lack of information prevented them from filing a proper reply. Revenue's arguments: The respondents argued that material was available to establish the petitioner's involvement in tax evasion. However, they conceded that this material had not been provided to the petitioner in support of the show cause notice.
Sections Cited
None explicitly mentioned in the provided text, but the context implies procedural provisions related to show cause notices and cancellation of registration under GST law.
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Cause title — parties, addresses and appearances
JUDGMENT [SANJEEV SACHDEVA, J. (ORAL)
Petitioner impugns order dated 19.09.2023, whereby, the GST registration of the petitioner has been cancelled. Said cancellation order was issued pursuant to a show cause notice for cancellation dated 20.07.2023. W.P.(C) 1179/2024 2. The reason mentioned in the show cause notice for proposed cancellation was:- “The Addl. Commissioner of State Tax-1 (Inv) vide letter No. PA/Addl./CST-01/446-448 dated 17-07-2023 has inform that the firm is involved in a big scam of evasion of tax.”
Petitioner was thereupon called upon to submit a reply, however, no reply was submitted by the petitioner.
As per the petitioner, neither the copy of letter of the Additional Commissioner dated 17.07.2023, referred to in the show cause notice was provided, nor any further information was provided. Petitioner was called upon to appear on the date and time notified in the show cause notice, however, the show cause notice does not mention any date, time or venue where the petitioner had to appear.
As per the respondents, there is material available to establish that the petitioner firm was involved in big scam of evasion of tax. However, it is conceded that the said material has not been provided to the petitioner in support of the show cause notice.
In view of the above, impugned order dated 19.09.2023 is set aside. Proper Officer is directed to furnish all material that the Proper Officer may have in support of the show cause notice to the petitioner W.P.(C) 1179/2024 within one week from today. Thereafter, petitioner shall file a reply thereto within one week. The Proper Officer shall thereafter re- adjudicate the show cause notice within a maximum period of two weeks after giving an opportunity of personal hearing to the petitioner.
Petition is accordingly disposed of in the above terms.
Needless to state that petitioner shall be entitled to avail of such remedies as permissible in law if aggrieved by any order/action of the respondents. SANJEEV SACHDEVA, J RAVINDER DUDEJA, J FEBRUARY 27, 2024 sk
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.