HC questions order issued by GST authorities to cancel firm’s registration

Another case of Goods and Services Tax (GST) authorities cancelling the registration of a company without allegedly following the rules has come to the fore.

The Delhi High Court has found fault with an order by GST authorities who had rejected an application by a company for changing its principal place of business and cancelled its registration as the show cause notice (SCN) was devoid of valid reasons.

It directed the company to file all requisite documents and information as required by the GST authorities in support of its application for revocation of cancellation of GST registration.

The petitioner, Sai Aluminium EXIM, claimed that it had changed its principal place of business in 2022 and in June of that year applied for amendment in its GST registration to reflect this change.

Sai Aluminium claimed that it had not received any SCN proposing to reject its application for the amendment. Notwithstanding the same, the petitioner’s application was rejected by an order in May, 2023 on the ground that the requisite information was not submitted.

Later in September 2023, an SCN was issued to the petitioner proposing to cancel its GST registration under the section 29(2)(e), a legal clause on registrations obtained by means of fraud, wilful misstatement or suppression of facts.

The petitioner was called upon to appear before the officer concerned in September, 2023 and to file a reply to the SCN within a period of seven working days.

The SCN did not reflect any specific reason for cancelling the petitioner’s GST registration. It also did not specify the alleged fraud committed by the petitioner or the wilful misstatement made by them or any facts that were allegedly suppressed by the petitioner.

However, the petitioner’s GST portal reflected a letter addressed by the assistant commissioner, Anti Evasion Branch, stating that certain taxpayers, including this company, were found to be non-existent and requested for initiation of proceedings in that regard.

Thereafter, the petitioner’s GST registration was cancelled by an order given on September 14 this year that does not mention any reason. It merely stated that the impugned order has been passed with reference to the SCN.

The petitioner’s GST registration was cancelled with the retrospective effect from July 1 even though the SCN did not propose the retrospective cancellation of the petitioner’s GST registration.

The petitioner contended that the impugned order is liable to be set aside as the petitioner has not issued any prior notice of inspection of its premises.

The court upheld the company’s contention that the SCN proposing to cancel its GST registration did not specify any reason for such cancellation and that the impugned order is void for it is not informed by reason.

It observed that the petitioner had shifted its principal place of business and had duly informed the GST authorities of the same by filing a requisite application.

However, the said application was rejected almost a year later on the ground that it had failed to provide requisite information.

The court directed the officer concerned to satisfy that the company is carrying on the business at its principal place of business as claimed by it and in the event he is so satisfied, the order cancelling the GST registration would be revoked.