Case Law Details
Green Polymers Vs Union of India & Ors (Delhi High Court)
Introduction: In a recent judgment, the Delhi High Court addressed the issue of GST registration cancellation in the case of Green Polymers vs. Union of India & Ors. The petitioner had challenged the cancellation of their GST registration, and the court’s decision sheds light on the reasons and implications of such cancellations.
Detailed Analysis:
1. Background: The petitioner, an individual operating under the name M/s Green Polymers, had their GST registration canceled. The primary contention was that their registration had been obtained through fraudulent means, willful misstatement, or suppression of facts.
2. Impugned Orders: The petitioner contested the cancellation and, after a period, successfully applied for the revocation of the cancellation, resulting in the restoration of their GST registration. However, despite this restoration, the respondent issued a fresh show cause notice (SCN) proposing another cancellation. This move led to the legal proceedings in the Delhi High Court.
3. Lack of Reasoning: The crux of the matter lies in the lack of clarity in the reasons for cancellation. The impugned orders, both the earlier and the recent one, failed to provide specific and clear reasons for the cancellation. The court noted that the SCN did not specify whether the cancellation was due to fraud, willful misstatement, or suppression of facts, making it challenging for the petitioner to respond meaningfully.
4. Judicial Intervention: The Delhi High Court found the impugned order and SCN lacking in reasoning and set them aside. The court emphasized that such decisions must be well-founded and provide a clear basis for cancellation to enable affected parties to defend their case effectively.
Conclusion: The Delhi High Court’s judgment in the Green Polymers vs. Union of India & Ors case highlights the importance of transparency and clarity in GST registration cancellation cases. Cancellation orders should provide specific and comprehensible reasons, ensuring that individuals and businesses have a fair opportunity to challenge such decisions. This case serves as a precedent for ensuring due process in GST registration cancellations.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Issue notice.
2. The learned counsel for the respondents accepts notice.
3. The petitioner has filed the present petition, inter alia, impugning the show cause notice dated 30.06.2023 (hereafter ‘the impugned SCN’) proposing to cancel the petitioner’s GST registration for the following reasons.
“1. Section 29(2)(e)-registration obtained means of fraud, wilful misstatement or suppression of facts.”
4. The petitioner also impugns the order dated 08.08.2023 (hereafter ‘the impugned order’) cancelling the petitioner’s GST registration with effect from 20.07.2022. The impugned order is set out below:-
“Reference Number: ZA0708230446693 Date 08/08/2023
To
AMIT GOYAL
HOUSE NO.A-34, KHASRA N0.40/31.GROUND FLOOR,KHERA
GARHI STREET N0.-4,New Delhi. North
Delhi, Delhi,110082
GSTIN/ UIN :07DCOPG1543MIZB
Application Reference Number(ARN): AA0706230935508 Date 07/07/2023
Order for Cancellation of Registration
This has reference to show cause notice issued dated 30/06/2023.
The effective date of cancellation of your registration is 20/07/2022
3. It may be noted that a registered person furnishing return under subsection (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order.
4. You are required to furnish all your pending returns.
5. It may be noted that the cancellation of registration shall not affect the liability to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.
Place: RANGE – 44
Date: 08/08/2023
Naveen Kumar Manchanda
Superintendent
Ward 71”
5. It is apparent from the above that the impugned order cancelling the petitioner’s GST registration is not informed by reason, does not provide any clue as to why the petitioner’s GST registration has been cancelled.
6. The petitioner is an individual (holds GST No.07DCOPG1543MIZB) and carries on the business under a sole proprietorship concern named M/s Green Polymers. The petitioner claims that his principal place of business was located at H. No. A-34, Khasra No. 40/31, Ground Floor, Khera Garhi, Street No.4, New Delhi, 110082. On 16.05.2023, he had requested respondent no.2&3 to update his address in the records.
7. Thereafter on 19.05.2023, the petitioner was issued a show cause notice, inter alia, proposing to cancel its GST registration on the ground that it was obtained by ‘fraud, wilful misstatement or suppression of facts’. The petitioner contested the said show cause notice. However, without referring to any of the material, as provided by the petitioner, the respondents cancelled the petitioner’s GST registration by an order dated 15.06.2023. The petitioner immediately applied for revocation of the cancellation of the GST registration which was allowed by an order dated 26.06.2023, and the petitioner’s GST registration was restored.
8. Notwithstanding that the petitioner’s GST registration was restored on 26.06.2023; the respondent issued the impugned SCN on 30.06.2023 and once again cancelled the petitioner’s GST registration by the impugned order.
9. It is apparent from the impugned SCN that apart from alleging that the registration was obtain by fraud, wilful misstatement or suppression of facts – which was also the ground on which the petitioners’ GST registration was cancelled in the earlier round – it does not indicate any specific reason(s) for proposing cancellation of the petitioner’s GST registration. The impugned SCN is incapable of eliciting any meaningful response as it does not indicate as to what is the fraud allegedly perpetuated by the petitioner or the wilful misstatement allegedly made by the petitioner. It also does not indicate as to which material fact was suppressed by the petitioner. It is also not clear whether the petitioner’s GST registration is proposed to be cancelled on account of fraud or wilful misstatement or suppression of facts as all the three reasons are indicated.
10. In view of the above, the impugned order is set aside as it is not informed by reason. The impugned SCN is also set aside for the reasons stated above.
11. The petition is allowed in the aforesaid terms. The pending application is also disposed of.
