Case Law Details
Green Polymers Vs Union of India & Ors. (Delhi High Court)
In a recent judgment by the Delhi High Court, the case of Green Polymers Vs Union of India & Ors. has drawn attention for its critical examination of procedural fairness in GST registration matters. The Court’s decision revolves around the validity of a GST cancellation order and the corresponding show cause notice (SCN) issued against the petitioner, Green Polymers.
Background of the Case: Green Polymers challenged a GST cancellation order and the preceding show cause notice. The SCN, issued on June 2, 2023, proposed the cancellation of Green Polymers’ GST registration under the generic category “Others” without specifying detailed reasons. This lack of clarity in the SCN led to the suspension of the petitioner’s GST registration effective from the same date.
Impugned Order and Legal Issues: On July 14, 2023, the impugned order was issued, canceling the GST registration retroactively from July 10, 2022. The order, however, failed to provide any substantive reasons for the cancellation, merely referencing the SCN. This omission raised significant concerns about the adherence to principles of natural justice and due process.
Court’s Observations: The Delhi High Court scrutinized the procedural validity of the SCN and the cancellation order. It observed that:
- The SCN did not include specific grounds for the cancellation, rendering it insufficient for eliciting a meaningful response from the petitioner.
- The impugned order lacked reasoning, which is essential for ensuring that decisions are made transparently and justly.
The Court highlighted that the failure to provide reasons or a clear basis for the cancellation undermines the procedural fairness required in administrative actions. Such actions, if allowed to stand, could lead to arbitrary decisions impacting taxpayers adversely.
The Court’s ruling invalidates both the SCN and the cancellation order, emphasizing the necessity for administrative bodies to follow due process and provide clear justifications for their actions. The restoration of Green Polymers’ GST registration reflects the Court’s commitment to upholding principles of justice and ensuring that decisions affecting taxpayers are both fair and reasoned.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 55040/2023 (for exemption)
1. Exemptions allowed, subject to all just exceptions.
2. The application stands disposed of.
W.P.(C) 13941/2023
3. Issue notice.
4. The learned counsel for the respondents accepts notice.
5. The petitioner has filed the present petition, inter alia, impugning an order dated 14.07.2023 (hereafter ‘the impugned order’) cancelling the petitioner’s GST registration. The petitioner also impugns a Show Cause Notice dated 02.06.2023 (hereafter ‘the SCN’), pursuant to which the impugned order was passed.
6. Respondent no. 3 had issued the impugned SCN proposing to cancel the petitioner’s GST registration for the reason: “Others”.
7. The petitioner was called upon to respond to the impugned SCN within a period of seven working days, and to appear before the concerned officer on 09.06.2023. The petitioner’s GST registration was also suspended with effect from 02.06.2023.
8. Thereafter, Respondent no. 3 passed the impugned order cancelling the petitioner’s GST registration with retrospective effect from 10.07.2022. The impugned order indicates no reasons but merely mentions that the same was with regards to the impugned SCN.
9. It is apparent from the above, neither the impugned SCN nor the impugned order can be sustained. The impugned SCN does not refer to any reason for proposing to cancel the petitioner’s GST registration and was incapable of eliciting any meaningful response. The impugned order is also not informed by any reason and has been passed in violation of principles of natural justice.
10. In view of the above, the petition is allowed. The impugned SCN as well as the impugned order cancelling the petitioner’s GST registration are set aside. The petitioner’s GST registration is directed to be restored forthwith.
11. The petition is disposed of in the aforesaid terms.
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