Facts of the Case

The Petitioner, M/s. Abhishek Appliance Pvt. Ltd., challenged the cancellation of its GST registration (GSTIN 07AAACA5800B1ZG) by an order dated 06.03.2024 passed by the Superintendent, Ward-73. The cancellation was based on a Show Cause Notice (SCN) dated 14.02.2024 issued under Section 29(2) of the CGST Act.

The SCN was issued pursuant to a communication from the Anti-Evasion Branch, which reported that the petitioner’s principal place of business was found non-existent during inspection. The GST registration was also suspended from the date of the SCN.

The inspection revealed that the declared premises was under construction and no business activity was found. However, the petitioner claimed it had an additional place of business and had also applied for a change of address, which was approved shortly thereafter.

Despite this, the registration was cancelled retrospectively from 02.07.2017, primarily on the ground that the petitioner failed to respond to the SCN.

Issues Involved

  1. Whether the Show Cause Notice issued for cancellation of GST registration was legally valid.
  2. Whether cancellation of GST registration without proper opportunity of hearing violates principles of natural justice.
  3. Whether retrospective cancellation of GST registration from the date of grant was justified.
  4. Whether non-existence at the principal place of business alone is sufficient ground for cancellation without proper inquiry.

Petitioner’s Arguments

  • The SCN was issued mechanically based on a letter from the Anti-Evasion Branch without independent application of mind by the Proper Officer.
  • The time granted to respond (seven working days) was illusory, as the hearing was fixed before expiry of the response period.
  • The SCN failed to mention essential details such as the name of the officer and venue of hearing, rendering it vague and defective.
  • The petitioner had an additional place of business which was not inspected.
  • The petitioner had already applied for change of principal place of business, which was approved.
  • Retrospective cancellation from 2017 was arbitrary, especially when business activity existed earlier (evidenced in 2021 inspection).

Respondent’s Arguments

  • The GST registration was proposed for cancellation as the petitioner was found non-existent at its principal place of business during inspection.
  • The respondent acknowledged that the petitioner should be given an opportunity to respond and fairly submitted that the matter could be remanded to the show cause stage.

Court’s Findings / Order

The Delhi High Court held that:

  • The impugned order cancelling GST registration was unsustainable as it was passed without granting an effective opportunity of hearing.
  • The cancellation was primarily based on non-response to the SCN, which itself suffered from procedural deficiencies.
  • The petitioner must be given a fair opportunity to respond to allegations regarding non-existence at the principal place of business.

Order:

  • The cancellation order dated 06.03.2024 was set aside.
  • The matter was remanded to the Proper Officer.
  • The petitioner was granted 10 days to file a detailed response with supporting documents.
  • A personal hearing was directed to be granted before passing a fresh order. 

Important Clarifications by the Court

  • Mere allegation of non-existence at the principal place of business cannot justify cancellation without proper adjudication.
  • Authorities must ensure application of mind before issuing SCNs.
  • Opportunity of hearing must be real and effective, not a mere formality.
  • Retrospective cancellation requires strong justification and cannot be done mechanically.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB03072024CW89202024_150526.pdf 

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