Case Law Details
Rajdhani Trading Co. Vs Principal Commissioner Of Department Of Trade And Taxes (Delhi High Court)
The High Court has restored the petitioner’s GST registration after finding that the Show Cause Notice (SCN) did not provide any date, time, or venue for a personal hearing. This oversight was deemed a breach of natural justice principles. The petitioner must clear dues within four weeks to maintain the restoration order.
In a significant judicial decision, the Delhi High Court has intervened in the case of Rajdhani Trading Co. vs Principal Commissioner of Department of Trade and Taxes, setting aside the cancellation of GST registration. The court found procedural irregularities concerning natural justice, specifically the absence of details for a personal hearing in the Show Cause Notice (SCN).
The petitioner, Rajdhani Trading Co., had its GST registration cancelled due to non-filing of returns for six consecutive months. This action was initiated following a Show Cause Notice issued by the respondent, which did not specify the date, time, or venue for a personal hearing. Despite the petitioner’s failure to respond to the SCN, the Delhi HC noted a critical procedural flaw: the lack of opportunity for a personal hearing, a fundamental tenet of natural justice.
The court deliberated on the petitioner’s plea, emphasizing its willingness to comply with tax obligations and arguing the necessity of GST registration for business continuity. On the other hand, the respondent acknowledged the petitioner’s statutory non-compliance but conceded the absence of a personal hearing opportunity as stated in the SCN.
Ultimately, the Delhi High Court concluded that the cancellation order lacked adherence to principles of natural justice. It directed the restoration of Rajdhani Trading Co.’s GST registration, subject to the petitioner fulfilling outstanding tax liabilities and penalties within four weeks. The court underscored that failure to comply within this period would result in the revocation of the restoration order.
The judgment in Rajdhani Trading Co. vs Principal Commissioner of Department of Trade and Taxes reflects the judiciary’s commitment to upholding procedural fairness. By setting aside the cancellation of GST registration due to procedural irregularities in the SCN, particularly the absence of details for a personal hearing, the Delhi HC reaffirmed the importance of natural justice principles in administrative actions. This decision provides clarity on the rights of taxpayers in regulatory proceedings, emphasizing the necessity for authorities to ensure procedural compliance in such matters.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, praying that directions be issued to the respondent to restore its GST registration. The petitioner also impugns an order dated 30.05.2022 (hereafter the impugned order) whereby the petitioner’s GST registration was cancelled.
2. The petitioner was registered with the GST authorities with effect from 29.07.2021 and was issued Goods and Services Tax Identification Number – (GSTIN) No.07CBHPT4208D1ZR. The petitioner did not file its returns for a continuous period of six months and consequently, on 05.2022 the respondent issued the Show Cause Notice (hereafter the SCN) calling upon the petitioner to show cause as to why its registration not be cancelled for failure to file the returns for a continuous period of six months. The petitioner was also directed to furnish its reply to the SCN within a period of seven working days. The petitioner’s GST registration was also suspended with effect from the date of the SCN. The petitioner was further informed that if it fails to file reply within the stipulated period or fails to appear for personal hearing on the appointed date, its case would be decided on the basis of the available record and on merits.
3. It is important to note that the SCN did not indicate any date, time or venue for the personal hearing. The impugned order was passed pursuant to the aforesaid SCN. The petitioner failed to respond to the SCN. Consequently, the petitioner’s registration was cancelled by the impugned order, albeit with retrospective effect from 31.07.2021.
4. The petitioner claims that he is a bonafide tax payer and has discharged its entire tax liability. However, the petitioner does not dispute that it had failed to file its returns for a continuous period of six months.
5. The learned counsel appearing for the petitioner submits that the petitioner is ready and willing to make the payment of dues and prays that its GST registration be restored as the petitioner would be unable to carry on its business without such restoration. He also states that since its GSTIN has been cancelled, the petitioner is unable to secure a fresh registration.
6. Mr. Singhvi, learned counsel appearing for the respondent submits that since there is no dispute that the petitioner failed in statutory compliances, the impugned order cannot be assailed. However, he is unable to dispute that the petitioner was not afforded any personal hearing as the SCN did not indicate any date, time or venue for the same. Thus, undisputedly, the principles of natural justice were not complied with.
7. In view of the above, we consider it apposite to set aside the impugned order and direct that the petitioner’s registration be restored. The petitioner shall file its GST returns as due and also clear all its tax dues within a period of four weeks thereafter. The petitioner shall also pay the penalty and other charges as imposed by the respondent.
8. In case, the petitioner fails to clear the dues within a period of four weeks from date, the present order directing the restoration of the petitioner’s GSTIN, shall stand revoked without any further orders. We also clarify that the respondents are not precluded from initiating any other proceedings for non-compliance of the statutory provisions by the petitioner or for recovery of any further amount, if found due and recoverable from the
9. This order is passed in the peculiar facts of the case.
10. The petition stands disposed of in the aforesaid terms.
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