Summary: The Delhi High Court, in the case of M/s Abhishek Appliance (P.) Ltd. v. Assistant Commissioner CGST, ruled that an Assessee must be provided with an opportunity for a personal hearing before their GST registration is canceled. The petitioner’s GST registration was suspended following a Show Cause Notice (SCN) issued by the Anti-Evasion Branch, alleging that the principal place of business was non-existent. The court observed that the petitioner had applied for a change of business address, which had been approved prior to the SCN issuance. Despite this, the GST registration was canceled without giving the petitioner a proper chance to contest the allegations or submit sufficient evidence. The court remanded the matter, directing that the petitioner be allowed to respond to the allegations and furnish relevant details regarding their business operations. The judgment emphasized the importance of adhering to Section 29 of the CGST Act, which mandates that no registration should be canceled without giving the Assessee a fair opportunity to be heard.
The Hon’ble Delhi High Court in the case of M/s Abhishek Appliance (P.) Ltd. v. Assistant Commissioner CGST [Writ Petition (Civil) No. 8920 of 2024 dated July 03, 2024] ruled that an Assessee should be given an opportunity to respond the allegations and submit the evidence regarding place of business. Hence, the matter remanded for reconsideration after affording personal hearing was provided to the Assessee and writ petition was disposed of.
Facts:
M/s Abhishek Appliance (P.) Ltd. (“the Petitioner”) were served Show Cause Notice dated February 14, 2024 (“the Impugned SCN”) by the Superintendent. The Petitioner was called upon to furnish reply to the Impugned SCN within the period of seven working days from the date of service of the notice and appear before undersigned dated February 20, 2024. However, the Petitioner’s GST Registration was also suspended from February 14, 2024, in terms of the Impugned SCN. Thereafter, an Order dated March 06, 2024 (“the Impugned Order”), was passed by the Superintendent (“the Respondent”) to cancel the Petitioner’s GST Registration.
The Petitioner contended that, the Impugned SCN was issued only pursuant to a letter dated February 06, 2024, issued by the Anti Evasion Branch. Thus, the reason for cancelling the Petitioner’s GST Registration is required to be ascertain in the letter. Although, the Petitioner was called upon to appear before the proper officer on February 20, 2024, prior to the expiry of the seven days period and no effective opportunity was given to the Petitioner to contest the proposed action. Further, the Impugned SCN does not set out either name of the concerned officer before whom the Petitioner was to appear, nor the venue at which the hearing will take place.
The Anti- Evasion Branch had conducted an inspection at the Petitioner’s principal place of business and the place of business was non-existent, but the Petitioner’s GST Registration not only reflected the principal place of business but also an additional place. However, no inspection was carried out at the additional place. After the inspection on January 01, 2024, the Petitioner had applied for the change of address on February 06, 2024, and same was allowed on February 07, 2024, and an amended certificate of registration was issued.
Hence, aggrieved by the Impugned SCN and the Impugned Order, the present writ petition was filed by the Petitioner.
Issue:
Whether opportunity of personal hearing should be granted to an Assessee before cancelling the GST registration?
Held:
The Hon’ble Delhi High Court in Civil Writ Petition No. 8920 of 2024 held as under:
- Observed that, the Impugned Order indicates that the Petitioner’s GST Registration was cancelled for the sole reason that the Petitioner found non-existent at its principal place of business. It is also apparent that the Petitioner has sought to change its principal place of business more than once.
- Held that, the Petitioner to be permitted to file a response to the allegation regarding the non-existence at its principal place of business as it will be open for the Petitioner to set out the complete details as to when it has ceased to carry on its business from its principal place of business and also to furnish sufficient evidence as to the place from where it continued to carry on its business, within a period of ten days from date.
Our Comments:
Section 29 of the CGST Act governs “Cancellation or suspension of registration”. Further, Section 29(2) of the CGST Act states that the proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-
a. a registered person has contravened such provisions of the CGST Act or the CGST rules made thereunder as may be prescribed; or
b. a person paying tax under section 10 of the CGST Act has not furnished returns for three consecutive tax periods; or
c. any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
d. any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced business within six months from the date of registration; or
e. registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
However, the proper officer shall not cancel the registration without giving the person an opportunity of being heard.
Reliance is place on pari materia case of the Hon’ble Delhi High Court in M/s Soni Sales Corporation v. Superintendent, CGST Delhi [ Civil Writ Petition No. 4010/2024 dated March, 21 2024] held that while modifying the retrospectively cancelled GST registration held that no opportunity was given to the petitioner for objecting to the retrospectively cancelled GST registration. Further, the bench 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. After analysing the facts and arguments of both parties, a division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja modifying the retrospectively cancelled GST registration and observed that no opportunity was given to the petitioner.
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