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The Delhi High Court has held that non-payment of dues for a period of three months is not a prescribed ground for cancelling the petitioner’s GST registration.
The bench of Justice Vibhu Bakhru and Justice Sachin Datta has observed that order has also been passed in violation of principles of natural justice. Although the Show Cause Notice called upon the petitioner to appear for a personal hearing at the appointed date and time, no such date or time was indicated. Thus, in effect the petitioner was not afforded an opportunity to be heard. The department is directed to restore the petitioner’s GST registration.
Background
The petitioner/assessee has challenged the order by which the petitioner’s GST registration was cancelled with retrospective effect from 01.07.2017. The order was issued pursuant to a Show Cause Notice by which the petitioner was called upon to show cause why its GST registration not be cancelled. The only reason set out in the SCN for proposing to cancel the petitioner’s GST registration.
The petitioner was called upon to furnish a reply to the SCN within a period of seven days from the date of service of the SCN. The petitioner was also put to notice that if he failed to furnish a reply or appear for a personal hearing on the appointed date and time, the case would be decided ex parte on the basis of available records on merits. However, the SCN did not mention any appointed date or time fixed for personal hearing. Additionally, the petitioner’s GST registration was suspended with effect from the date of the SCN – that is with effect from 03.09.2021.
The petitioner’s GST registration was subsequently cancelled. The order does not reflect any reason for cancelling the petitioner’s GST registration.
The issue raised was whether cancellation of the petitioner’s GST registration is warranted for the reason as set out in the SCN.
Conclusion
The court held that this did not preclude the department from initiating any proceedings for recovery of dues or for any statutory non-compliances albeit in accordance with law.
FAQs
Is Non-Payment Of Dues For Three Months Not Prescribed Ground For GST Registration Cancellation?
Yes. The Delhi High Court has held that non-payment of dues for a period of three months is not a prescribed ground for petitioner’s GST registration cancellation.
Case Title: Subhana Fashion Versus Commissioner Delhi Goods And Service Tax
Case No.: W.P.(C) 12255/2024 and CM APPL. 50939/2024 (Stay)
Date: 19.09.2024
Counsel For Petitioner: Pulkit Verma
Counsel For Respondent: Rajeev Aggarwal
