Introduction: In a recent case (W.P.(C) No. 164 of 2024), the Delhi High Court addressed a crucial issue regarding the cancellation of GST registration. The court’s decision to set aside the cancellation order emphasizes the significance of providing proper reasoning in a Show Cause Notice (SCN) issued by the Revenue Department.
The Hon’ble Delhi High Court in the case of Kundan Impex v. Principal Commissioner of Department of Trade and Taxes [W.P.(C) No. 164 of 2024 dated January 5, 2024] disposed of the writ petition by setting aside the order of cancellation as Show Cause Notice was devoid of any proper reasoning.
Facts:
Revenue Department (“the Respondent”) issued Show Cause Notice dated July 5, 2023 (“the Impugned SCN”) to Kundan Impex (“the Petitioner”) thereby suspending GST registration on the ground that the Petitioner had fraudulently availed ITC based on false invoices.
Aggrieved by the Impugned SCN, the Petitioner filed a writ petition before the Hon’ble Delhi High Court.
Issue:
Whether the SCN issued for cancellation of GST registration devoid of any proper reasoning is valid?
Held:
The Hon’ble High Court of Delhi in W.P.(C) No. 164 of 2024 held as under:
- Noted that, the Impugned SCN and letter issued against the Petitioner is bereft of details pertaining to entry or invoice issued without any supply of goods or services.
- Opined that, the letter and the Impugned SCN issued are devoid of any proper reasoning as there is no clarity pertaining to availment of fraudulent ITC by the Petitioner, thereby writ petition is disposed of.
- Held that, the Impugned SCN is set aside.
Conclusion: The Delhi High Court’s decision in W.P.(C) No. 164 of 2024 serves as a reminder of the fundamental requirement for proper reasoning in Show Cause Notices related to GST registration cancellation. The court’s emphasis on clarity and details sets a precedent for future cases, promoting fairness in administrative actions.
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