Facts of the Case

The petitioner, M/s APJ Investments Pvt Ltd, was issued a show cause notice dated 22.08.2022 alleging that its GST registration had been obtained by fraud, wilful misstatement or suppression of facts. The petitioner replied on 25.08.2022 denying the allegation and explaining it was winding up its Delhi operations and would voluntarily seek cancellation once import consignments in transit arrived. The Proper Officer, by order dated 13.10.2022, cancelled the registration — noting that reasons had not been communicated due to a 'technical error' but had allegedly been explained to the petitioner's Chartered Accountant, based on a submission that the petitioner had shifted its registered premises to Sonipat, Haryana. The petitioner's subsequent revocation application was rejected on 28.11.2022 for failure to respond to a further show cause notice dated 11.11.2022, and its appeal against that rejection was dismissed on 28.04.2023 on the same shifted-premises ground. The petitioner approached the Delhi High Court against the original notice, the cancellation order, the revocation rejection and the appellate order.

Issues Involved

  1. Whether the original show cause notice dated 22.08.2022 satisfied the legal requirement of disclosing adequate particulars for the proposed cancellation.
  2. Whether the cancellation and subsequent revocation-rejection/appellate orders, premised on the petitioner having 'shifted' from its registered premises, were sustainable.

Petitioner's Arguments

  • The petitioner contended that it continued to retain and operate from its registered premises, in addition to a location in Sonipat, and that operating from an additional location did not mean it had ceased operating from the registered address.
  • It submitted that it has nine places of business across the country and sought a further opportunity to place supporting documents on record.

Respondent's Arguments

  • The Department's counsel accepted notice and defended the cancellation, pointing to the petitioner's own Director having stated before the Appellate Authority that the premises had been shifted for a smaller space without informing the jurisdictional Commissionerate.
  • The Appellate Authority had proceeded on the basis that, this being admitted, and no documentary evidence having been placed to show continued operation from the registered address, the appeal was liable to be rejected.

Court Order / Findings

  • The Court found that although the petitioner had been given adequate opportunity in the revocation proceedings via the notice dated 11.11.2022, it was undisputed that the original show cause notice dated 22.08.2022 was cryptic and did not disclose the particulars necessary for proposing cancellation of registration.
  • It is trite law that a show cause notice must set out the reasons for a proposed adverse action so the noticee can meaningfully respond; the impugned notice did not meet this standard.
  • The Court considered it apposite to restore the petitioner's revocation application for fresh decision, rather than adjudicate the disputed factual question of continued occupation on writ.
  • The petitioner was granted two weeks to respond afresh to the notice dated 11.11.2022 and furnish supporting documents; the concerned officer was directed to afford a hearing and decide afresh.
  • All contentions of the petitioner were expressly kept open, and the petition was disposed of.

Important Clarification

  • A GST registration cancellation show cause notice that merely recites a statutory ground (such as fraud/misstatement/suppression) without stating the particulars or facts relied upon fails to meet natural-justice standards and cannot sustain a cancellation.
  • Even where the assessee has been given a fair opportunity at the later revocation stage, defects in the original show cause notice can justify restoring the process for fresh consideration rather than a final adjudication on disputed facts in writ jurisdiction.

Sections Involved

  • Section 29, Central Goods and Services Tax Act, 2017 – governs cancellation of registration, including on the ground of fraud, wilful misstatement or suppression of facts.
  • Section 30, Central Goods and Services Tax Act, 2017 – governs revocation of cancellation of registration, the process restored here for fresh consideration.

Decision – In Favour of

The disposal is in favour of the Assessee in part — the writ petition was allowed to the extent that the revocation application was restored for a fresh, reasoned decision after affording a further opportunity, while all contentions on the underlying facts were left open for that fresh determination.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 6033/2023
Coram: Justice Vibhu Bakhru and Justice Amit Mahajan
Date of Order: 09.05.2023

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