HC sets aside SCN & order cancelling GST registration passed without giving any reasons

Case Details: VDR Colors and Chemicals (P.) Ltd. v. Principal Commissioner - [2023] 148 taxmann.com 108 (Delhi)

Judiciary and Counsel Details

• • Vibhu Bakhru & Amit Mahajan, JJ.
  • Surender Kumar & A.K. Babbar, Advs. for the Petitioner.
  • Atul Tripathi, Sr. Standing Counsel & Arvind Kumar for the Respondent.

Facts of the Case

The department issued a show cause notice (SCN) to the petitioner as to why GST registration should not be cancelled. The SCN stated the reason for cancellation as ‘others’. The petitioner replied to the SCN by stating that the notice was issued without providing proper information. However, the order cancelling GST registration of the petitioner was passed.

The petitioner filed writ petition to challenge the cancellation order and contended that the SCN did not disclose any reason or ground for proposing cancellation of its GST registration and therefore it could not be addressed by the petitioner.

High Court Held

The Honorable High Court noted that the impugned SCN failed to disclose any reason for proposed action of cancelling registration and was incapable of eliciting meaningful response from taxpayer. The Court also noted that the SCNs are not meant to be issued mechanically to comply with formality but to serve principles of natural justice.

Thus, any notice that does not clearly state allegations with reasons and enabling taxpayer to respond can’t be considered as SCN. Therefore, it was held that the impugned SCN and order were liable to be set aside.