Mere issuance of SCN not enough to cancel GST registration, rules Delhi HC
In a recent judgment, the Delhi High Court has reaffirmed that the mere issuance of a show cause notice (SCN) by the tax authority is not enough to cancel the Goods and Services Tax (GST) registration of any entity. The judgement addresses the ongoing uncertainty surrounding the authority to cancel registration based solely on an SCN, and the prevailing doubts over its cancellation with retrospective effect.
In a petition filed by Subhana Fashion, the court invalidated the decision of cancelling GST registration terming the SCN as ‘in violation of principles of natural justice.’ The court ruled that the authorities must provide some ‘intelligible reasons’ and also an ‘opportunity of being personally heard’ while proposing to cancel the GST registration.
It further said that the ‘non-payment of dues for three months’ is not a prescribed ground for cancelling the registration.
SCN must contain every detail
Earlier, in another case filed by a construction company (M/s Chauhan Construction Co), the court ruled that the SCN must contain every specific detail. In the said case, the authorities had issued an SCN to the company, asking it to appear for a personal hearing within seven days, failing which would lead the case to be decided ex parte (done in the interest of only one party).
However the court said that the show cause notice (SCN) didn’t state ‘any appointed date, time or venue for personal hearing’. It ruled that since the SCN was devoid of ‘any particulars’, the cancellation order must be revoked.
