Facts of the Case

The petitioner, Kordient Ventures Pvt. Ltd., challenged the cancellation of its GST registration vide order dated 12.12.2022, which was passed pursuant to a Show Cause Notice (SCN) dated 09.09.2022.

The SCN alleged that the petitioner was not functioning from its principal place of business. However, the SCN did not specify any date or time for personal hearing, despite directing the petitioner to appear.

The petitioner contended that it had already applied for a change in its place of business on 23.10.2020. This application was rejected by an order dated 11.11.2020, which did not provide any reasons and left the reasoning section blank.

Additionally, a field inspection conducted on 06.12.2022 noted the presence of the petitioner’s manager but concluded that the petitioner was not functioning at the principal place of business.

Issues Involved

  1. Whether cancellation of GST registration is valid when the Show Cause Notice does not provide an opportunity of hearing with specified date and time.
  2. Whether an order rejecting amendment of business address without reasons is legally sustainable.
  3. Whether GST registration can be cancelled when authorities fail to update records reflecting the changed place of business.

Petitioner’s Arguments

  • The petitioner had already applied for amendment of its principal place of business, but the application was wrongly rejected without assigning any reasons.
  • The SCN was defective as it failed to mention the date and time for personal hearing, violating principles of natural justice.
  • The cancellation of GST registration was arbitrary since it was based on outdated records and denial of opportunity to correct the business address.

Respondent’s Arguments

  • The GST registration was cancelled on the ground that the petitioner was not functioning at its declared principal place of business.
  • The field inspection report supported the conclusion that the petitioner was not operating from the registered premises.

Court’s Findings / Order

The Hon’ble Delhi High Court observed:

  • The petitioner’s GST registration was effectively cancelled because authorities did not allow updating of the business address in records.
  • The order dated 11.11.2020 rejecting amendment of address was non-speaking and unsustainable, as it contained no reasons.
  • Proper procedural fairness was not followed.

Directions Issued by the Court:

  1. The petitioner is permitted to file an application for revocation of cancellation of GST registration within two weeks along with supporting documents.
  2. The Proper Officer shall decide the application by a reasoned (speaking) order within one week.
  3. The authority shall also consider the request for amendment of place of business, ignoring the earlier defective order.

Important Clarification

  • A non-speaking order (order without reasons) is legally unsustainable.
  • A defective SCN without proper hearing opportunity violates principles of natural justice.
  • Authorities must allow taxpayers to update records before taking adverse action like cancellation.

Sections Involved

  • Section 29 of the Central Goods and Services Tax Act, 2017 – Cancellation of Registration
  • Section 30 of the Central Goods and Services Tax Act, 2017 – Revocation of Cancellation
  • Principles of Natural Justice (Audi Alteram Partem)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59520102023CW139342023_171949.pdf

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