Case Law Details
Rajesh Kumar Singhal Vs Goods And Services Tax Network & Ors (Delhi High Court)
In a recent judgment, the Delhi High Court rendered a significant decision regarding the validity of a Show Cause Notice (SCN) issued by the Goods and Services Tax Network (GSTN). The case, titled Rajesh Kumar Singhal Vs Goods And Services Tax Network & Ors, saw the court quashing the SCN due to fundamental deficiencies. The petitioner challenged the notice, citing lack of clarity on the issuing authority and vague accusations, leading to the suspension of their GST registration.
The crux of the petitioner’s argument lay in the ambiguity surrounding the SCN. Firstly, the petitioner contended that neither the name nor designation of the issuing authority was mentioned in the notice. This absence of vital information hindered the petitioner’s ability to address the allegations effectively. Moreover, the SCN merely extracted legal provisions without providing specific instances or evidence of non-compliance.
The court acknowledged the petitioner’s concerns, emphasizing the necessity for detailed and specific SCNs. It highlighted that vague notices impede the respondent’s right to defend themselves adequately. The absence of particulars regarding invoices or bills issued without supply of goods or services rendered the notice insufficient for proper adjudication. Consequently, the court deemed the SCN defective and lacking essential details, leading to its quashing.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Learned counsel for respondent no.2 submits that respondent no. 2 is neither necessary nor a proper party as the tax payer is registered under the State GST authority.
2. Learned counsel for petitioner submits that the petitioner was not clear as to which authority has issued the notice as the notice does not give the name or designation of the issuing authority and as such by way of abundant caution, he impleaded both the State as well as the Central GST authority as parties to the petition.
3. Petitioner impugns Show Cause Notice dated 12.10.2022 whereby the GST registration of the petitioner is proposed to be cancelled.
4. Issue notice. Notice is accepted by learned counsel appearing for respondent. With the consent of the parties, petition is taken up for final disposal today.
5. Learned counsel for petitioner submits that registration of the petitioner has been suspended and the petitioner is unable to do any business.
6. Perusal of the Show Cause Notice shows that the impugned Show Cause Notice dated 12.10.2022 has been issued to the petitioner to show cause as to why the GST registration be not cancelled for the following reason:
“Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”
7. The Show Cause Notice also requires the petitioner to appear before the signatory of the Show Cause Notice. However, neither the name nor designation of any officer is mentioned as to where the petitioner has to appear. Further, petitioner has also filed a response to the Show Cause Notice, however, Show Cause Notice has till date not been adjudicated.
8. Learned counsel for respondent no.1 submits that the Show Cause Notice is pending consideration before the proper authority and states that the same can be disposed of within a time bound period.
9. Normally, this Court does not interdict a Show Cause Notice and delegates the authorities to adjudicate the Show Cause Notice, however, we note that the subject Show Cause Notice itself is defective and does not give any details or particulars. The Show Cause Notice in the reasons column has merely extracted the provisions of law. It states that the petitioner has issued invoices or bills without supply of goods or services, however, no details of invoices, bills or non-supply of goods or services has been mentioned in the Show Cause Notice.
10. This Court has consistently held that a Show Cause Notice that does not contain any details or particulars is vague and cannot be expected to be responded to.
11. In view of the fact that the Show Cause Notice is bereft of any details and suffers from infirmities that go to the root of the cause, we are not exercising the power of remit and directing the proper officer to re-adjudicate the Show Cause Notice.
12. In view of the infirmities in the Show Cause Notice, we quash the same. The impugned Show Cause Notice dated 12.10.2022 is accordingly set aside.
13. It would be however open to the respondent authority to issue a proper Show Cause Notice giving full particulars of the infractions, if any, committed by the petitioner as also an opportunity of personal hearing to the Show Cause Notice.
14. It is clarified that Respondents are not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law including retrospective cancellation of the GST registration.
15. Petition is disposed of in the above terms.
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