Rahul Kumar Jain and Co. Vs Union Of India & Anr. (Delhi High Court)
In a recent case, M/s. Rahul Kumar Jain and Co. challenged the cancellation of their GST Registration by the Revenue Department. The Delhi High Court, in its judgment dated September 12, 2023, observed that GST Registration cannot be cancelled without providing specific reasons. The Court held that show cause notices and orders lacking reasons cannot be upheld.
Facts:
M/s. Rahul Kumar Jain (“the Petitioner”) is a Proprietorship Concern engaged in the business of wholesale supply of scrap and discarded material.
The Petitioner received a Show Cause Notice dated May 16, 2023 (“the Impugned SCN”) proposing to cancel the GST Registration and interalia alleged that the Petitioner had obtained registration by means of fraud, wilful misstatement or suppression of facts and the learned superintendent proposed the cancellation of GST registration under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and suspended the GST Registration with effect from the date of issue of Impugned SCN, i.e., May 16, 2023.
The Petitioner in compliance with the Impugned SCN, furnished the reply stating that there has been no fraud, wilful misstatement, or suppression of facts on the part of the Petitioner during the process of obtaining GST registration.
The Petitioner further asked about the allegations to understand why and on what ground, the department had alleged that the Petitioner had taken registration by means of fraud, wilful misstatements or suppression of facts so that the Petitioner can submit the defense and a detailed reply to the same.
The Revenue Department (“the Respondent”) without considering the reply of the SCN and/ or providing any opportunity of being heard and/ or stating any reasons for fraud, wilful misstatements or suppression of facts as alleged in the Impugned SCN, issued an order for cancellation of registration on May 29, 2023 (“the Impugned Order”).
Adv. Bimal Jain (Advocate of the Petitioner) argued before the Hon’ble Delhi Court stating that the Impugned SCN and Impugned Order cannot be sustained as it does not sufficiently set out the reasons why the Petitioner’s GST Registration was cancelled and is violative of the principle of natural justice.
Issues:
