Delhi High Court: In a petition filed challenging an impugned order dated 04-05-2023, passed by respondent 2 whereby the petitioner’s Goods and Services Tax (GST) Registration was cancelled and to impugn the show cause notice (‘SCN’) dated 17-04-2023, as a result of which the order was passed, the Division Bench of Vibhu Bakhru* and Sachin Datta, JJ. set aside the impugned order and directed the petitioner to respond to the impugned SCN within four weeks.
Background
The petitioner claimed that the impugned SCN was issued solely based on the communication received from the other department, without the proper officer being independently satisfied with the same. The petitioner contended that such a SCN could not be issued on the dictates of another authority.
The respondents submitted that the impugned SCN was not issued on the dictates of another officer but because the communication sent to the petitioner was received back with the observation — ‘No such firm found’.
Analysis and Decision
The Court stated that this was not a case where an action had been taken by the proper officer to cancel the GST registration, based on the dictates of another authority. The Court noted that the respondent had issued the impugned SCN proposing to cancel the GST registration of the petitioner because a letter sent to him was received undelivered from the postal authorities with the remark — ‘No such firm found. Please explain your existence’.
The Court noted that the petitioner was called upon to reply within seven working days and was also directed to appear before the proper officer on 24-04-2023 at 4:10 PM. However, the petitioner did not avail the opportunity to file any reply or appear before the proper office.
The Court noted that the proper officer issued the impugned order because the petitioner was not existent at the given place of business. The Court noted that the impugned order mentioned that neither any reply in response to the impugned SCN was filed nor was there any representation on behalf of the petitioner.
The Court noted that the petitioner had incorrectly contended that it had filed a reply to the impugned SCN, since the same was based solely on the reference to a reply dated 27-04-2023 made in the impugned order. The Court stated that this reference was erroneous, and it found mention due to the erroneous template used for such orders.
The Court noted that even though the opening sentence of the impugned order indicated that it was in reference to the petitioner’s reply in response to the impugned SCN, but no reply was furnished by the petitioner and the same was mentioned in the subsequent sentence in the impugned order. Further, the Court stated that the petitioner had also not annexed a copy of the reply to the impugned SCN, which was claimed to have been sent by the petitioner.
The Court noted that after the impugned order was passed, the petitioner filed an application dated 19-07-2023 to seek condonation of delay in filing the application seeking revocation of the cancellation of the GST registration.
The Court noted that this was considered by the proper officer and the SCN dated 16-01-2024 was issued to the petitioner, which indicated that the proper officer was not satisfied with the reasons for the delay. Subsequently, by an order dated 30-01-2024, the petitioner’s application seeking condonation of delay was rejected.
Thus, the Court found that the petitioner’s case as to why its registration should not be cancelled had not been considered on merits.
Thus, the Court set aside the impugned order cancelling the petitioner’s GST registration and permitted the petitioner to respond to the impugned SCN. Further, the Court stated that since the only allegation against the petitioner was that it was found to be non-existent, the petitioner was at liberty to furnish all documents and material in support of its contention that it continues to be a valid tax entity.
The Court, while disposing of the petition, directed the petitioner to file the response to the impugned SCN along with all relevant material within four weeks and directed the proper officer to consider the same and pass an informed decision after affording the petitioner an opportunity to be heard.
[Olive Traders v. Commr. (CGST), 2024 SCC OnLine Del 4767, Decided on 08-07-2024]
*Judgment by Justice Vibhu Bakhru
Advocates who appeared in this case:
For Petitioner — Advocate Shivender Kumar Sharma, Advocate Urooj Chaudhary
For Respondent — Senior SC Shashank Sharma
