Case Law Details
Samayshristi Enterprises Vs Superintendent (Delhi High Court)
Introduction: The Delhi High Court recently delivered a crucial judgment in the case of Samayshristi Enterprises vs. Superintendent, challenging the cancellation of GST registration. The petitioner contested an order dated 26.10.2023, raising concerns about procedural irregularities and lack of clarity in the show cause notice (SCN).
Detailed Analysis: The impugned order, based on the SCN dated 18.09.2023, cited Section 29(2)(e) regarding registration obtained through fraud, wilful misstatement, or suppression of facts. However, the SCN failed to provide specific details of the alleged violations, rendering it incapable of eliciting a meaningful response. This flaw raised questions about procedural fairness.
Moreover, the impugned order lacked substantive reasoning, merely referencing the SCN. The petitioner’s counsel highlighted a previous show cause notice dated 20.09.2021, citing identical grounds for GST registration cancellation. The petitioner’s registration was initially cancelled on 30.09.2021, leading to an unsuccessful appeal. Subsequently, the petitioner sought revocation, successfully restoring registration on 16.09.2023.
The court acknowledged the merit in the petitioner’s argument – once registration is restored after being cancelled for alleged fraud, misstatement, or suppression, a subsequent cancellation must be based on post-restoration grounds. The court set aside the impugned order, directing the immediate restoration of the petitioner’s GST registration. The decision emphasized that this ruling does not prevent the respondent from taking lawful steps under the statute.
Conclusion: The judgment in Samayshristi Enterprises vs. Superintendent underscores the importance of procedural clarity in GST registration cancellation proceedings. The court’s decision to set aside the impugned order reflects a commitment to fairness and due process. It also establishes a precedent, clarifying that restoration of registration implies a clean slate, requiring fresh grounds for any subsequent cancellation. This case serves as a vital reference for businesses navigating GST regulatory challenges and reinforces the judiciary’s role in upholding procedural integrity.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Issue notice.
2. The learned counsel appearing for the respondent accepts notice.
3. The petitioner has filed the present petition impugning an order dated 26.10.2023 (hereafter ‘the impugned order’) passed by the respondent cancelling the petitioner’s GST registration with effect from 20.03.2021 (the date of registration).
4. The impugned order was passed pursuant to a Show Cause Notice dated 18.09.2023 (hereafter ‘the SCN’). The respondent had issued the SCN proposing to cancel the petitioner’s GST registration for the following reasons: –
“1. Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts”
5. The petitioner was directed to respond to the SCN within a period of seven working days from the said date and to appear before the concerned officer on 25.09.2023. The petitioner’s GST registration was also suspended with effect from the date of the SCN; that is, from 18.09.2023.
6. Concededly, the SCN did not specifically stated the reason for proposing to cancel the petitioner’s GST registration. Although it was alleged that the GST registration was obtained by means of fraud, wilful misstatement, or suppression of facts, but the SCN did not provide any clue as to the alleged fraud committed by the petitioner or the wilful misstatement made by it. There is no indication as to the facts which are alleged to have been suppressed by the petitioner. It is trite law that a show cause notice is to respond to the allegation which form the basis of
proposing an adverse action. In the present case, the SCN was incapable of eliciting any meaningful response.
7. The impugned order is also bereft of any reason. It merely states that it is in reference to the SCN. In view of the above, the impugned order is liable to be set aside as it is void and not informed by reason.
8. The learned counsel for the petitioner also points out that the respondent, prior to the SCN, had issued a Show Cause Notice dated 20.09.2021 proposing to cancel the petitioner’s GST registration for the same reason – Registration has been obtained by means of fraud, wilful misstatement and suppression of facts.
9. The petitioner’s GST registration was, thereafter, cancelled in terms of the order dated 30.09.2021. The petitioner had appealed the order dated 30.09.2021 before the Appellate Authority, however, the said appeal was also rejected on the ground of delay. Thereafter, on 13.05.2023, the petitioner had applied for seeking revocation of cancellation of its GST registration in terms of the circular dated 31.03.2023. The petitioner’s application was accepted and the petitioner’s GST registration was restored by an order dated 16.09.2023.
10. We also find, prima facie, merit in the petitioner’s contention that once the petitioner’s GST registration was
restored – which was cancelled on an allegation that it was obtained by fraud, misstatement or suppression of facts – it is not open for the respondent to again cancel the petitioner’s GST registration for the same reason unless it is premised on the ground that had occurred after the petitioner’s GST registration has been cancelled on 30.09.2021.
11. In view of the above, the present petition is allowed and the impugned order is set aside and the petitioner’s GST
registration is directed to be restored forthwith. All pending applications are also disposed of.
12. It is clarified that this would not preclude the respondent from taking steps under the statute in accordance with the law.
13. Dasti under the signature of the Court Master.
