Samarth Enterprises vs. Department Of Trade And Taxes & Anr.

Facts

The Petitioner, Samarth Enterprises, filed a writ petition before the Delhi High Court challenging an order dated 02.07.2026 that cancelled its GST Registration No. 07AFUFS1992L1Z0. The cancellation was based on the finding that the Petitioner was not conducting business from its declared place of business, as discovered during an on-site inspection. The Petitioner had initially received a Show Cause Notice on 26.02.2026, to which it replied, and the proceedings were dropped on 09.03.2026, pending a field visit. Subsequently, a fresh Show Cause Notice was issued on 12.06.2026, followed by the impugned cancellation order despite the Petitioner's reply. The Respondent noted that the Petitioner registered in February 2026 with Nil turnover, which remained Nil in March 2026, but significantly increased to Rs. 10 crores in April 2026 and Rs. 28.49 crores in May 2026.

Held

The Court did not decide the substantive issues regarding the justification for the cancellation of the GST registration. Instead, the Petitioner's counsel sought and was granted permission to withdraw the present Writ Petition. This withdrawal was with the liberty to file an application seeking revocation of the cancellation of the GST Registration. The Respondent's counsel had no objection to this course of action. Therefore, the Court dismissed the writ petition as withdrawn, granting the Petitioner the specified liberty. No specific finding was made on the merits of the cancellation order or the arguments presented by either side. The Court's decision was based on the Petitioner's request for withdrawal and liberty to pursue an alternative remedy.

Key Issues

1. Whether the cancellation of the Petitioner's GST registration was justified on the grounds that it was not conducting business from the declared place of business, as per Section 29(2)(e) of the CGST Act, 2017, read with Rule 21(b) of the CGST Rules, 2017? Petitioner's Contention: The Petitioner sought to quash the cancellation order, implying that the cancellation was arbitrary or not based on sufficient grounds, especially given the prior dropping of proceedings and the submission of a reply to the second show cause notice. The Petitioner's request to withdraw the petition with liberty to seek revocation suggests an intention to rectify any perceived deficiencies rather than contest the cancellation on merits at this stage. Respondent's Contention: The Respondent argued that the Petitioner's business registration in February 2026 with Nil turnover, followed by a sudden surge in turnover to Rs. 10 crores in April 2026 and Rs. 28.49 crores in May 2026, raised suspicions regarding the genuineness of its operations at the declared place of business, which formed the basis for the cancellation.