Case Law Details
Prince Garg Vs Avato Ward 63 State Goods And Service Tax & Anr. (Delhi High Court)
The Delhi High Court quashed a show cause notice (SCN) issued to Prince Garg by the State Goods and Service Tax authorities for cancelling his GST registration, citing a lack of specific allegations. The SCN, issued on July 2, 2024, merely cited Rule 21(b) of the CGST Rules, 2017, without specifying which invoices or bills were allegedly issued without supplying goods or services. The petitioner argued that the SCN was vague and did not provide sufficient details to form a proper defense. The court noted that the SCN failed to meet the necessary standards as it lacked specific reasons or supporting documents, making it difficult for the petitioner to respond effectively. Consequently, the court set aside the SCN and ordered the immediate restoration of the petitioner’s GST registration. However, the court also clarified that this decision would not prevent the authorities from initiating fresh proceedings if deemed necessary under the law.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Issue notice.
2. The learned counsel for the respondents accept notice.
3. The petitioner has filed the present petition impugning the show cause notice dated 02.07.2024 (hereafter the impugned SCN) issued by the proper officer calling upon the petitioner to show cause as to why his Goods and Service Tax (GST) registration not be cancelled.
4. The only reason set out in the impugned SCN for proposing to cancel the petitioner’s GST registration reads as under:-
“1. Rule 21 (b)- person issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder.”
5. The petitioner was also called upon to file a reply to the impugned SCN within seven working days from the date of service of the notice and was also directed to appear before the proper officer on 10.07.2024.
6. Additionally, the petitioner’s GST registration was suspended with effect from 02.07.2024, being the date of the impugned SCN. The petitioner submitted his reply to the impugned SCN on 09.07.2024 stating that the impugned SCN is cryptic in nature and no specific allegations as to which bill or invoice was issued without the supply of goods or services or both have been mentioned. The petitioner has also raised the objection to the impugned SCN on the ground that no name and designation of the officer is mentioned in the impugned SCN.
7. It is contended that one month has elapsed after the reply was submitted by the petitioner, yet no decision has been taken on the impugned SCN. In the meanwhile, by virtue of the impugned SCN, the petitioner’s GST registration remain suspended. The petitioner is essentially aggrieved by the same.
8. It is apparent from the impugned SCN that the same does not provide any specific reason for proposing to cancel the petitioner’s GST registration. The impugned SCN has merely reproduced Rule 21(b) of the Central Goods and Services Tax Rules, 2017 (hereafter the CGST Rules). The impugned SCN also does not indicate as to which bill or transaction is alleged to be in non-compliance of the statutory provisions. Although, Rule 21(b) of the CGST Rules provides for the cancellation of the GST registration in case the tax payer issues the invoice or bill without the supply of goods or services in violation of the provisions of the CGST Act. However, the proper officer has failed to specify as to which invoice / bill is without the supply of goods or services has been allegedly issued by the petitioner. No document is annexed with the impugned SCN, which provides any clue as to which allegation is sought to be raised.
9. The purpose of issuance of the show cause notice is to enable the noticee to respond to the allegations on the basis of which an adverse action is proposed. Absent of any specific allegation, the issuance of the show cause notice is rendered meaningless.
10. In the present case, the impugned SCN fails to meet the requisite standards of the show cause notice. Accordingly, the present petition is allowed. The impugned SCN is liable to be set aside. The respondents are directed to restore the petitioner’s GST registration forthwith.
11. It is clarified that this order will not preclude the proper officer from initiating any fresh proceedings, if warranted, in accordance with law.
12. The pending application also stands disposed of.
Also Read:
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Delhi HC Restores GST Registration: Failure to Mention Reason
Cancellation of GST registration without providing reason in SCN/Order is cryptic in nature
GST registration cannot be cancelled without proper reasoning: Delhi HC
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Delhi HC Quashes GST Registration Cancellation: Lack of Details and Reasons
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