Facts of the Case

The petitioner, Cuthbert Winner LLP, challenged the cancellation of its GST registration by the respondent authority. The registration was cancelled vide order dated 25.07.2023 based on a Show Cause Notice dated 02.06.2023 alleging that the petitioner was non-existent at its registered place of business.

Prior to the issuance of the Show Cause Notice, the petitioner had already applied for change of principal place of business on 08.04.2023. However, this application was rejected due to non-submission of required documents.

Subsequently, officials from the Directorate of Revenue Intelligence (DRI) visited the petitioner’s old premises and found it non-operational, which led to the cancellation proceedings.

The petitioner filed an application for revocation of cancellation on 02.08.2023, but instead of deciding the same, the department sought additional information including ITC reconciliation, which was unrelated to the original ground of cancellation.

Issues Involved

  1. Whether GST registration can be cancelled on the ground of non-existence when the taxpayer had already applied for change of business address.
  2. Whether the Proper Officer can raise new grounds (ITC mismatch) while deciding revocation of cancellation.
  3. Whether delay in deciding revocation application violates principles of natural justice.

Petitioner’s Arguments

  • The petitioner had already shifted its principal place of business prior to the inspection by DRI.
  • The cancellation was based on an incorrect assumption that the petitioner was non-existent.
  • The department failed to decide the revocation application and instead raised irrelevant issues (ITC mismatch).
  • Due to cancellation, the petitioner had no access to GST portal, making compliance difficult.

Respondent’s Arguments

  • The petitioner was found non-operational at the registered premises during inspection.
  • The petitioner failed to provide sufficient documentary proof regarding the new address.
  • There were discrepancies in ITC claimed, requiring reconciliation.

Court’s Findings / Order

The Hon’ble Court held:

  • The Proper Officer must decide the application for revocation by examining whether the petitioner was actually existent at the relevant time.
  • The issue of ITC mismatch was not a valid ground for cancellation and cannot be introduced at the stage of revocation.
  • The authority must complete proceedings within six weeks.
  • If the petitioner is found to be existent at the relevant time, the GST registration must be restored immediately.
  • The department must provide necessary records to enable the petitioner to respond to further queries.

Important Clarifications

  • Cancellation of GST registration must be based strictly on valid and existing grounds, not subsequent issues.
  • Authorities cannot expand the scope of proceedings by introducing new allegations during revocation stage.
  • Taxpayers must be given fair opportunity and access to records to defend their case.
  • Administrative delays in deciding revocation applications are discouraged by the Court.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59511122023CW154332023_123756.pdf

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