Case Law Details
Neelkanth Metals Vs Union of India & Anr. (Delhi High Court)
Introduction: The Delhi High Court recently addressed a crucial case involving GST registration cancellation in the matter of Neelkanth Metals Vs Union of India & Anr. The petitioner sought relief against the impugned Show Cause Notice and Summons issued by the Commissioner of CGST, Delhi West, New Delhi.
Detailed Analysis: The court’s scrutiny focused on the Show Cause Notice dated 22.05.2023, which proposed the cancellation of GST registration under Section 29(2)(e), citing “registration obtained by means of fraud, wilful misstatement, or suppression of facts.” The petitioner contested the lack of specificity in the notice, asserting a violation of the principles of natural justice.
The court concurred, highlighting that a meaningful response was unattainable due to the absence of specific allegations in the impugned SCN. Emphasizing settled law, the judgment declared the SCN void and directed the revocation of the suspension of the petitioner’s GST registration.
Conclusion: The Delhi High Court’s directive sets a precedent, emphasizing the importance of clear and specific Show Cause Notices in matters of GST registration cancellation. Upholding the principles of natural justice, the court ruled in favor of the petitioner, mandating a proper notice with specific allegations before any adverse action. This judgment establishes a framework for fair proceedings in GST cases, ensuring transparency and due process.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The petitioner has filed the present petition, inter alia, praying as under:
“(a) Allow the present petition and issue a writ of certiorari or any other appropriate writ, order or direction to quash and set-aside the impugned Show Cause Notice dated 22.05.2023 and Summons dated 06.06.2023, 01.08.2023 and 10.08.2023 issued by the Commissioner of Central Goods and Service Tax (CGST), Delhi West, New Delhi; AND
(b) Direct the Respondents to revoke the suspension and restore the GST registration of Petitioner i.e. M/s Neelkanth Metals forthwith;”
2. Insofar as the petitioner’s challenge to the summons issued by the Commissioner of Central Goods and Service Tax, West Delhi, New Delhi is concerned, this Court had rejected the same by an order dated 12.2023.
3. The examination in the present petition is now confined to the Show Cause Notice dated 22.05.2023 (hereafter ‘the impugned SCN’), whereby the petitioner’s GST Registration was proposed to be cancelled.
4. A plain reading of the impugned SCN indicates that the proper officer had proposed to cancel the petitioner’s GST Registration for the following reason:
“1 Section 29(2)(e)-registration obtained by means of fraud, wilful misstatement or suppression of facts.”
5. The petitioner was called upon to respond to the impugned SCN within a period of seven working days and appear before the proper officer on 23.05.2023. Additionally, the petitioner’s GST Registration was suspended from the date of the impugned SCN, that is, with effect from 22.05.2023.
6. A plain reading of the impugned SCN indicates that it is bereft of any specific reason for proposing cancellation of the petitioner’s GST registration. It does not provide any particulars as to the alleged fraud committed by the petitioner. It also provides no clue as to the wilful misstatement made or the facts allegedly suppressed.
7. It is settled law that the Show Cause Notice must clearly set out the reasons for proposing an adverse action. This is to enable the noticee to meet the said allegations. Clearly, the impugned SCN was incapable of eliciting any meaningful response in the absence of any specific allegation.
8. In view of the above, there is merit in the petitioner’s contention that the impugned SCN is liable to be set aside. It is so directed.
9. Having stated the above, we clarify that in the event, the respondents propose to take any action for cancellation of the petitioner’s GST registration, it would be open for the respondents to do so, albeit, in accordance with the law. The respondents would be required to issue a proper Show Cause Notice and take an appropriate decision after affording the petitioner a reasonable opportunity to be heard.
10. The respondents are also not precluded from taking any steps for the recovery of any tax, penalty or interest that may be due from the petitioner.
11. The suspension of the petitioner’s GST Registration will stand lifted forthwith and the respondents are directed to take immediate steps for the same.
12. The petition is disposed of in the aforesaid terms. The pending application is also disposed of.
