Case Law Details
Aditya Narayan Ojha (Amit Associates) Vs Principal Commissioner, CGST, Delhi North & Anr. (Delhi High Court)
The Hon’ble Delhi High Court in Aditya Narayan Ojha (Amit Associates) v. Principal Commissioner, CGST & Anr. [W.P.(C) No. 8508 of 2022, dated August 2, 2022] has directed the Department to restore GST registration of the assessee within one week upon filing of pending returns along tax and other dues. Held that, notice is needed to be served to the assessee under Rule 25 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) before physical inspection is carried out.
Facts:
Aditya Narayan Ojha (“the Petitioner”) is the Proprietor of firm the M/s Amit Associates, who was served with a Show Cause Notice dated September 28, 2021 (“the SCN”) for cancellation of its GST Registration on the ground that it was obtained by means of fraud, wilful misstatement and suppression of facts. Due to no reply to the SCN within the prescribed time limit of one week, the GST Registration of the Petitioner was cancelled vide order dated October 10, 2021, passed by the Revenue Department (“the Respondent”).
Subsequently, an appeal was filed by the Petitioner wherein, the first Appellate Authority reversed the order passed by the Respondent vide the Order-in-Appeal (“OIA”) stating that there was no wilful default by the Petitioner.
Further, the Petitioner had also submitted an undertaking dated December 31, 2021 stating the Petitioner had already filed all its previous returns along with the tax amount and that will file pending returns along with the amount of tax along with interest within 15 days of restoration of GST Registration.
The Petitioner has filed the present writ petition against the non-compliance of the OIA with by the Respondent.
The Petitioner further stated that no notice of physical inspection was served. However, the non-existence of the Petitioner upon inspection by the Respondent was the prime basis of the cancellation of Registration of the Petitioner, which was not mentioned in the cancellation order.
Issue:
Whether the Respondent should comply with the OIA?
Held:
The Hon’ble High Court of Delhi in W.P.(C) 8508/2022 of 2022 held as under:
- Noted that, the Respondent did not comply with the requirement of serving notice before carrying out physical inspection as per Rule 25 of the CGST Rules.
- Observed that, there is no reference in the order passed by the Respondent to the fact that the Petitioner was not found to be in existence and therefore, the GST registration was cancelled. The only reason adverted to in the order is no response from the Petitioner w.r.t. the SCN.
- Stated that, the Respondent have no other alternative, but to comply with the order of the Appellate Authority, given the fact that they have taken no steps to approach the Court, despite liberty having been given.
- Held that, the Respondents must comply with the order of the Appellate Authority.
- Directed the Respondent to comply with the OIA and restore the GST Registration of the Petitioner within one week of filing of pending returns.
Relevant Provisions:
Rule 25 of the CGST Rules:
“Physical verification of business premises in certain cases. –
Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.”
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The principal grievance of the petitioner is that the Order-in-Appeal [in short “OIA”] dated 07.01.2022 has not been complied with by the respondents/revenue.
1.1. Via the aforesaid order, the appellate authority has revoked the order by which the petitioner’s GST registration was cancelled.
2. We may note that the order, via which the GST registration of the petitioner was cancelled, is dated 10.10.2021. The said order, in turn, is predicated on the show-cause notice (SCN) dated 28.09.2021
2.1. In the SCN, the proposal to cancel the petitioner’s registration was premised on the following:
“In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.”
2.2. Via the SCN, the petitioner was granted seven (7) working days to respond i.e., present its defence. Besides this, the SCN also indicated the date and when its representative would be heard in support of its stand.
2.3. Concededly, the petitioner neither filed a reply, nor did anyone appear before the concerned officer.
2.4. Strangely, the order cancelling the registration dated 10.10.2021 alludes to a reply dated 07.10.2021, when none was filed by the petitioner, as is evident on perusal of the counter-affidavit filed by the respondents/revenue.
2.5. Thereafter, as noticed above, the petitioner’s registration was cancelled via order dated 10.10.2021.
2.6. Thus, being aggrieved, the petitioner preferred an appeal. The first appellate authority, as noticed above, reversed the order dated 10.10.2021. The reasoning put forth by the first appellate authority reads as follows:
“5.4 Now I take up for consideration the plea made by the Appellant for revocation of their cancelled registration; what is to be examined is whether sufficient cause exists for revocation of cancellation of registration. The Appellant has stated that he is Proprietor of firm M/s Amit Associates. The Appellant vide letter dated 31.12.2021 has submitted Undertaking stating that they had filed GST returns till September 2021 along with tax amount, shall file pending returns with tax within 15 days of restoration of GST registration along with interest, shall pay any other government dues if found subsequently under the GST Act. I observe that the default by the Appellant was not wilful. There is also an Undertaking of the Appellant on record to make the payment of pending taxes and filing of pending returns. The law also permits revocation of cancellation of registration on sufficient cause being shown; the cause shown by the Appellant is sufficient to allow revocation of cancellation of registration.
5.4.1 Further, I also refer to the Central Board of Indirect Taxes & Customs, New Delhi Circular No. 99/18/2019-GST, dated 23-04-2019, wherein at Para 3 of said circular it has been clarified that:
“3. First proviso to sub-rule (1) of rule 23 of the said Rules provides that if the registration has been cancelled on account of failure of the registered person to furnish returns, no application for revocation of cancellation of registration shall be filed, unless such returns are furnished and any amount in terms of such returns is paid. Thus where the registration has been cancelled with effect from the date of order of cancellation of registration, all returns due till the date of such cancellation are required to be furnished before the application for revocation can be filed. Further, in such cases, in terms of the second proviso to sub-rule (1) of rule 23 of the said Rules, all returns required to be furnished in respect of the period from the date of order of cancellation till the date of order of revocation of cancellation of registration have to be furnished within a period of thirty days from the date of the order of revocation.”
5.4.2 The Appellant has submitted relevant documents like copy of aadhar card of the appellant along with bank passbook, photographs of the premises and surroundings, rent agreement of place of business, NOC by the owner of the property to early business activities, electricity bills & copy of property documents, copies of GSTR-3B till September’2021 86 relevant sales & purchase invoices, I find that the appellant is registered at the address “2377 & 2384, 1st Floor, Gali Ghanta Kakwan, Farash Khana, G.B Road, Delhi-110006” and carrying out its business activities from the said address as alleged by the Adjudicating Authority of the Principal Place of Business of the Appellant and therefore, I hold that contention of the Adjudicating Authority is not sustainable.”
[Emphasis is ours]
3. It is in this backdrop i.e., on account of the OIA dated 07.01.2022 not being complied with (as alluded to hereinabove), that the petitioner has approached this Court.
4. In the first instance, the matter was listed before the Court on 27.05.2022, when we had, after capturing the grievance of the petitioner, issued notice in the matter.
4.1. On that date, Mr Akash Vajpai, had accepted notice on behalf of the respondents/revenue. Accordingly, Mr Vajpai was directed to return with instructions, as to why OIA dated 07.01.2022, had not been given effect to. 4.2. Thereafter, the matter was listed in Court on 02.06.2022. On the said date, Mr Vajpai had indicated to us that a decision had been taken by respondents/revenue to prefer an appeal against the OIA dated 07.01.2022. 4.3. However, given the fact that the Appellate Tribunal under the Goods and Services Tax Act, 2017 [hereafter referred to as “GST Act”] had not been constituted, we granted liberty to the respondents/revenue to file a writ petition. 4.4. Mr Vajpai informs us that, in line with the liberty given by the Court, a communication dated 15.07.2022 was addressed to the Principal Chief Commissioner, CGST-Delhi Zone by the Additional Commissioner of CGST-Delhi (North Commissionerate).
4.5. Sadly, since then, Mr Vajpai informs us, there has been no movement in the matter.
5. Mr Karan Sachdev, who appears on behalf of the petitioner, says that the delay is causing immense detriment to the petitioner. It is submitted that without GST registration, the petitioner is neither able to carry on its business nor is in a position to make statutory compliances.
5.1. Furthermore, Mr Sachdev says a perusal of the order of cancellation [i.e., order dated 10.10.2021], would show that even on the date when the petitioner’s registration was cancelled, nothing was owed by the petitioner towards tax, interest and/or penalty.
5.2. In any event, according to Mr Sachdev, the petitioner has given an undertaking, as recorded in the OIA dated 07.01.2022, to the effect, that if there is any outstanding tax liability, the same will be liquidated.
5.3. On being queried, Mr Sachdev stated that no notice of physical inspection was served on the petitioner. Mr Sachdev says that the inspection of the petitioner’s premises (and the finding that the petitioner was not in existence at the said premises) was the prime reason, based on which the respondents/revenue proceeded, it appears, to cancel the petitioner’s registration; although, the said reason does not find mention in the order dated
5.4. This reason, according to Mr Sachdev, is embedded in the counter-affidavit filed on behalf of the respondents/revenue. Mr Sachdev, thus, emphasizes that the counter-affidavit cannot improve upon the order dated 10.10.2021.
6. We are in agreement with the contention advanced on behalf of the petitioner. The order dated 10.10.2021 does not advert the aforesaid reason, which now finds a place in the counter-affidavit filed on behalf of the respondents/revenue.
6.1. In particular, there is no reference in the order dated 10.10.2021 to the fact that the petitioner was not found to be in existence and therefore, registration was cancelled.
6.2. The only reason adverted to in the order dated 10.10.2021 is: “No response received from the taxpayer’s end”
7. It cannot but be accepted that under Rule 25 of the Central Goods and Services Tax Rules, 2017, before carrying out physical inspection, the respondents/revenue are required to serve a notice on the concerned person/entity. However, as noticed above, all this did not form part of the order dated 10.10.2021.
7.1. Furthermore, the first appellate authority has given a rationale for revoking the order cancelling the petitioner’s GST registration; as noted hereinabove.
8. In the given circumstances, we find no good reason not to direct the respondents/revenue to comply with the OIA.
8.1. The respondents/revenue, at this juncture, have no other alternative, but to comply with the order of the first appellate authority, given the fact that they have taken no steps to approach this Court, despite liberty having been given, in that behalf, on 02.06.2022.
9. Accordingly, the writ petition is disposed of with a direction that the respondents/revenue shall restore the petitioner’s GST registration.
9.1. The restoration will be carried out within one week from the date of receipt of a copy of this judgement.
10. The parties will act based on the digitally signed copy of the judgement.
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