Case Law Details
Quality Traders Vs Yogesh Kumar & Anr (Delhi High Court)
Introduction: The Delhi High Court, in the case of Quality Traders vs Yogesh Kumar & Anr, has set aside the cancellation of GST registration through an order dated 04.07.2023. The court found that the cancellation violated the principles of natural justice, as the petitioner was not afforded a proper opportunity to be heard.
Detailed Analysis: The petitioner, operating as M/s Quality Traders, faced a Show Cause Notice dated 03.2023, initially proposing GST registration cancellation on the grounds of non-functioning at the principal place of business. The petitioner responded, explaining health-related constraints that affected daily office visits. The initial Show Cause Notice was dropped on 16.05.2023.
However, on the same date, a fresh Show Cause Notice was issued, alleging the petitioner’s involvement in paper transactions without goods movement. The petitioner was directed to submit various documents and appear for a hearing on 24.05.2023. The petitioner, along with necessary documents, claimed to be present on the appointed date, but no one was available in the office.
The petitioner sent a letter stating the attempted visit and the inability to upload documents due to file size. Despite this, the GST registration was cancelled through the impugned order on the grounds of failure to produce documents or attend the personal hearing.
The court, noting the petitioner’s compliance and the disputed communications, found a violation of natural justice. The order was set aside, and the matter was remanded to the Proper Officer for a fresh hearing, ensuring the petitioner’s right to be heard.
Conclusion: The Delhi High Court’s decision emphasizes the importance of adherence to natural justice principles in administrative actions. The court’s intervention ensures a fair opportunity for the petitioner to present their case, setting aside the cancellation and directing a fresh hearing.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning an order dated 04.07.2023 passed by Respondent No. 1 (hereafter ‘the impugned order’), whereby the petitioner’s GST registration was cancelled. The petitioner is an individual and, inter alia, carries on the business under the name of her sole proprietorship, M/s Quality Traders.
2. Respondent had earlier issued a Show Cause Notice dated 03.2023 (hereafter ‘the Show Cause Notice’) proposing to cancel the petitioner’s GST registration on the ground that it was not found functioning at the principal place of business.
3. The petitioner responded to the said Show Cause Notice on 05.03.2023. She explained that she conduct the business operations from the principal place of business. She stated that she was maintaining poor health and required to visit hospital frequently and, therefore, did not visit the office on a daily basis.
4. The petitioner’s explanation was accepted and by an order dated 16.05.2023, the Show Cause Notice was dropped. However, on the same date – that is on 16.05.2023, Respondent 1 issued another Show Cause Notice, inter alia, proposing to cancel the petitioner’s GST registration on the allegation that the petitioner was involved in paper transactions without any movement of goods.
5. It was alleged that the E-way bills submitted by the petitioner on the portal reflected the use of certain vehicles which raised doubts since, one of the vehicles was used for the supply of building material and, therefore, could not be used for the goods dealt with by the petitioner. Respondent No.1 also referred to two other vehicles whose registration certificates had expired.
6. In the circumstances, the petitioner was called upon to submit the sale and purchase bills for the Financial Years 2019- 2020 to 2022-2023; bank statements alongwith party ledger; stock register for the Financial Years 2019-2020 to 2022 -2023 and a copy of GR/e-way bills for proof of movement of goods. The petitioner was also directed to appear before the Proper Officer on 24.05.2023 at 16:32 hours.
7. It is the petitioner’s case that she was present at the office of the Proper Officer alongwith the necessary documents on the date fixed – that is 24.05.2023 at 16:32 hours. However, no one was present in the office on that date. The petitioner has produced the material, including the gate pass to establish that the petitioner’s representative (her son) was present on the appointed date and time.
8. The petitioner also sent a letter to the Proper Officer, inter alia, stating that she had attempted to visit the office and no one was present at the appointed time. She also stated that she was unable to upload the documents as the soft copy file of the documents exceeded the maximum limit as available for uploading the said documents.
9. The petitioner’s registration was cancelled by the impugned order, inter alia, on the ground that the petitioner had failed to produce the necessary documents or appear at the personal hearing.
10. Rajeev Aggarwal, learned counsel appearing for the respondents does not seriously dispute that the petitioner’s son had visited the office of the Proper Officer on the appointed date and time.
11. He further submits that the other communications as relied upon by the petitioner are disputed. In the given circumstances, it is apparent that the petitioner has not been afforded an opportunity to be heard and, therefore, the impugned order has been passed in violation of the principles of natural justice.
12. In the given circumstances, we consider it apposite to set aside the impugned order and remand the matter to the Proper Officer to consider it afresh, after affording the petitioner an opportunity to be heard.
13. We request the Proper Officer to conclude the said proceedings as expeditiously as possible and, preferably, within a period of four weeks from today.
14. The petition is disposed of in the aforesaid terms.
