Delhi HC directs fresh review of GST Registration cancellation application

Prime Accounting Solution Vs Union of India And Ors. (Delhi High Court)

In a recent ruling by the Delhi High Court in the case of Prime Accounting Solution Vs Union of India & Ors., the court addressed significant issues regarding the cancellation of GST registration and procedural lapses. The case centers on the petitioner’s request for GST registration cancellation and subsequent disputes over missed notices and delays. This article provides a detailed analysis of the court’s decision and its implications for GST registration disputes.

Background of the Case: Prime Accounting Solution, operated by Ms. Gurmeet Kaur, had its GST registration under GSTIN 07AIAPK3347E1ZM. The petitioner sought cancellation of this registration due to a turnover falling below the taxable threshold for the financial year ending on 31.03.2023. An application for cancellation was submitted on 20.04.2023. However, the GST department’s rejection of this request led to further legal complications, culminating in the present case.

Procedural Issues and Notices

The core issue revolved around procedural delays and the handling of notices related to the cancellation of GST registration:

• Initial Application and Suspension: Upon filing the cancellation application, the petitioner’s GSTIN was supposed to be suspended. Despite this, the department issued a notice on 26.05.2023, alleging non-filing of returns and requiring a response within 15 days. The petitioner, having already applied for cancellation, did not actively monitor the portal, causing the notice to be overlooked.
• Delayed Additional Information Request: On 28.12.2023, the GST department issued a notice seeking additional information concerning the cancellation application. This notice was delayed relative to the application date and was also missed by the petitioner due to the ongoing cancellation process.
• Rejection and Subsequent Notices: The petitioner’s application was rejected on 22.04.2024, leading to the issuance of a Show Cause Notice (SCN) on 13.05.2024. This SCN sought to address the failure to file returns post-31.03.2023 and imposed a suspension effective from the SCN date, with a hearing scheduled for 10.06.2024.

Court’s Ruling and Directions

The Delhi High Court’s ruling addressed the procedural lapses and provided specific directions:

• Cancellation Application Reconsideration: The court found the order rejecting the cancellation application to be unsatisfactory. It set aside the order dated 22.04.2024 and directed the petitioner to appear before the concerned officer on 10.07.2024. The officer is tasked with reviewing the cancellation application afresh and considering the SCN.
• Opportunity to be Heard: The petitioner is to be given an opportunity to present their case, ensuring that the GST registration cancellation request is evaluated fairly. This includes addressing the additional information required as per the notice dated 28.12.2023.
• Filing of Documents: The court directed the petitioner to file all relevant documents as required by the GST authority to facilitate the reconsideration of their cancellation request.

Conclusion

The Delhi High Court’s decision in Prime Accounting Solution Vs Union of India underscores the importance of procedural correctness and fairness in GST registration matters. By setting aside the previous rejection and mandating a fresh review of the cancellation application, the court has ensured that the petitioner’s request is considered equitably.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Issue notice. The learned counsel for the respondents accept notice.

2.The petitioner has filed the present petition, inter alia, praying that directions be issued to the respondent to cancel its GST Registration with effect from 31.03.2023. The petitioner also impugns an order dated 22.04.2024 whereby the petitioner’s request for cancellation of GST Registration with effect from 31.03.2023, was rejected.

3. The petitioner, Ms Gurmeet Kaur, is the sole proprietor of an accounting concern – M/s. Prime Accounting Solution. The petitioner was registered with the GST Department and holds the Goods and Services Tax Identification Number (GSTIN) – 07AIAPK3347E1ZM. The petitioner claims that during the financial year ending on 31.03.2023, its threshold turnover was below the minimum taxable turnover. Accordingly, the petitioner decided to seek cancellation of its GSTIN and made an application dated 20.04.2023 to the aforesaid effect.

4. The petitioner claims that its GSTIN would be suspended by virtue of the petitioner filing the said application. Notwithstanding the same, the respondent authority issued a notice dated 26.05.2023 alleging that the petitioner had failed to file the returns and called upon the petitioner to file a reply within 15 (fifteen) days.

5. The petitioner claims that the said notice was put on the portal, but since it had already applied for the cancellation of its GSTIN, it did not check the portal and the same escaped its notice.

6. Thereafter, on 28.12.2023, the respondent issued a notice seeking additional information pursuant to the petitioner’s application for cancellation of its GSTIN registration. Admittedly, the said notice was issued after considerable delay considering the petitioner’s application for cancellation was made on 20.04.2023. The said notice also escaped the attention of the petitioner for the aforesaid reason.

7. The petitioner’s application for cancellation of the GSTIN was thereafter rejected by an order dated 22.04.2024, which is impugned in the present petition.

8. Thereafter, the respondent has issued the Show Cause Notice dated 13.05.2024 (hereafter the impugned SCN) calling upon the petitioner to explain as to why its GSTIN registration not be cancelled for failure to furnish the return for a period of six months under Section 39 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act).

9. In terms of the impugned SCN, the petitioner’s GSTIN was suspended from the date of the impugned SCN and the petitioner was called upon to appear before the concerned officer on 10.06.2024 at 11.00AM.

10. It is apparent from the above, the action for cancellation of the petitioner’s GSTIN registration is founded on its failure to file the returns after 31.03.2023. The petitioner’s reason for not doing so is that it had already applied for the cancellation of its GSTIN registration.

11. In the aforesaid circumstances, we consider it apposite to set aside the order dated 22.04.2024 passed by the respondent rejecting the application for cancellation of the GSTIN registration. We further direct the petitioner to appear before the concerned officer on 10.07.2024 at 11.30AM.

12. The concerned officer shall afford the petitioner an opportunity to be heard and decide its application for cancellation of GSTIN afresh in addition to the impugned SCN. In the meanwhile, the petitioner shall file all relevant documents as required by the respondent authority and as set out in the notice dated 28.12.2023.

13. The petition stands disposed of in the above terms.