Case Law Details
Aaira Batteries Vs Principal Commissioner of Department Of Trade Taxes (Delhi High Court)
Introduction: The Delhi High Court recently delivered a judgment in the case of Aaira Batteries vs. Principal Commissioner of Department of Trade Taxes, setting aside the cancellation of the petitioner’s Goods and Service Tax (GST) registration. This article provides a detailed analysis of the case, focusing on the violation of natural justice principles and its broader implications.
Detailed Analysis: The petitioner, Aaira Batteries, challenged the order dated 09.2021, wherein their GST registration was canceled by the respondent. The court noted several crucial points in favor of the petitioner:
1. The show-cause notice lacked essential details, such as specific invoices or bills, making it challenging for the petitioner to respond adequately.
2. The notice did not provide the date, time, or venue for the petitioner’s personal hearing, a violation of natural justice principles.
3. The impugned order to cancel the GST registration lacked specific reasons and particulars of the alleged violations.
4. The court emphasized the importance of providing clarity to enable the petitioner to respond effectively and criticized the lack of transparency in the cancellation process.
Despite the respondent’s argument of delay in filing the petition, the court found the delay not pernicious to the petitioner’s claim. The judgment highlighted that the impugned order was passed in violation of natural justice, justifying its reversal.
The court directed the respondent to restore the petitioner’s GST registration promptly. It also addressed concerns about disclosure, stating that the petitioner must update its returns for the relevant period, allowing the department to examine business transactions.
Conclusion: In conclusion, the Delhi High Court’s decision to set aside the cancellation of Aaira Batteries’ GST registration underscores the importance of adhering to natural justice principles in administrative actions. The lack of specific details in the show-cause notice and the absence of reasons in the cancellation order were pivotal in the court’s decision. This case serves as a precedent for businesses facing similar situations, emphasizing the need for procedural fairness in matters related to tax registrations. While the petitioner’s registration is restored, the court clarifies that compliance with all legal provisions is imperative, and the respondent retains the right to take further action if any violations are found. This article provides a comprehensive overview of the case, shedding light on the legal intricacies involved and their implications for businesses dealing with GST registrations.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Exemptions allowed, subject to all just exceptions.
2. The application stands disposed of.
W.P.(C) 15843/2023
3. Issue notice.
4. Rajeev Aggarwal, learned counsel for the respondent, accepts notice.
5. The petitioner has filed the present petition, inter alia, impugning an order dated 09.2021 (hereafter ‘the impugned order’), whereby the petitioner’s Goods and Service Tax (‘GST’) registration was cancelled. The petitioner prays that the respondent be directed to restore the same.
6. The petitioner was registered with the GST authorities on 01.09.2018 and was assigned Goods and Service Tax Identification Number (‘GSTIN’), 07CKZPA5219E1Z2.
7. On 08.2021, the respondent issued a Show Cause Notice, proposing to cancel the petitioner’s registration for the following reasons:
“1 Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”
8. The petitioner was also called upon to furnish a reply to the aforesaid notice, within a period of seven working days and to appear before the concerned Officer. Additionally, the petitioner’s registration was suspended with effect from the date of the said notice, that is, with effect from 25. 08.2021.
9. Although, the petitioner was called upon to appear before the concerned Officer, the aforesaid show cause notice neither indicated the venue nor the date and time when the petitioner was required to appear.
10. It is also apparent that, although an allegation was made that the petitioner had issued invoices and bills without supply of goods, in violation of the provisions of the Act, the show-cause notice did not mention any specific invoices or bills. It also did not provide any other details such as the period during which such invoices were issued, which could identify the bills alleged to have been raised without supply of goods.
11. The show-cause notice also alleged that the issuance of such bills led to wrongful availment or utilisation of the Input Tax Credit (‘ITC’) or refund of tax, however, it did not specify either the quantum of the ITC wrongfully availed or the quantum of refund of tax collected on account of bills issued without supply of goods.
12. Pursuant to the show-cause notice, the respondent proceeded to cancel the petitioner’s GST registration by the impugned order. The said order did not specify any reasons for cancellation of the petitioner’s GST registration except mentioning that no reply to the aforementioned show-cause notice was received.
13. It is important to note that the tabular statement set out in the said order indicated that no Central tax/ State tax/ UT tax/ Integrated tax or cess was ascertained as due and payable by the petitioner.
14. We are of the view that the said show-cause notice is bereft of the necessary particulars so as to enable the petitioner to respond to the same with any clarity. Further, the petitioner was not afforded any opportunity of being This is because, even though the show-cause notice called upon the petitioner to appear for a personal hearing, it did not specify the date, time or the venue of such hearing.
15. The impugned order is also bereft of any reasons. It also does not mention particulars of the invoice or transactions which, according to the concerned authority, are contrary to or in violation of the provisions of the Act.
16. Rajeev Aggarwal, learned counsel appearing for the Revenue submits that the present petition is delayed as the petitioner has filed the petition, more than two years after the impugned order cancelling the petitioner’s GST registration, was passed. He also submits that the petitioner has not provided any clues as to the business or transactions carried out during the period of two years.
17. Although the petitioner has not approached this Court immediately after receiving the impugned order, we do not find that the delay is pernicious to the petitioner’s claim for restoration of the GST As is apparent from the above, the impugned order cancelling the petitioner’s registration was passed in violation of the principles of natural justice and is, thus, liable to be set aside.
18. If the petitioner’s GST registration is restored, the petitioner would be obliged to update its returns for the period, after its GST registration was This would enable the Department, not only examine the business carried out by the petitioner but any and every transaction entered into by the petitioner. This would address Mr Agarwal’s concern that the petitioner has not disclosed the transactions or the business carried out after its GST registration was cancelled.
19. In view of the above, the petition is allowed. The impugned order, cancelling the petitioner’s GST registration is set aside. The respondent is directed to forthwith restore the petitioner’s registration.
20. It is clarified that this order will not absolve the petitioner in complying with all provisions of the law. It also does not preclude the respondent from taking any further steps, if it is found that the petitioner has violated any of the provisions of law.
21. The petition is disposed of in the aforesaid terms.
22. The Central GST authorities are also directed to ensure that this order is complied with.
