Amir Malik v Gst Commissioner (Delhi High Court)

In the case of Amir Malik vs. GST CommissionerThe Delhi High Court dealt with a petition challenging the cancellation of the GST registration of the petitioner, Amir Malik, by an order dated July 4, 2023. The cancellation followed a show cause notice (SCN) issued on 16 June 2023, which stated that the petitioner’s registration was liable to be canceled due to non-compliance with unspecified provisions of the Goods and Services Tax Act (GST Act) and its related rules. The SCN asked the petitioner to respond within seven days and appear for a hearing; however, there was a lack of clarity as to which specific provisions were allegedly violated. Therefore, the registration was suspended from the date of the SCN and the final cancellation order referred to the SCN without offering any further justification.

The Court held that the SCN was fundamentally flawed, stating that it was “gloriously silent” as to which provisions of the GST Act or GST rules were allegedly violated. Neither the SCN nor the final reversal order stated reasons or provided context for the accusations against the petitioner. This lack of clear motivation was considered a critical deficiency, as it did not provide the applicant with sufficient information to effectively challenge the allegations. Accordingly, the High Court set aside both the SCN and the final order of annulment, indicating that the authorities retained the right to initiate further proceedings if necessary and in accordance with the law. The decision highlights the importance of transparency and specificity of regulatory actions taken under the GST, ensuring that individuals have a fair opportunity to respond to allegations made against them.

FULL TEXT OF THE DELHI HIGH COURT JUDGMENT/ORDER

Exemption permitted, subject to all fair exceptions.

The request will be rejected.

WP(C) 13706/2024

1. The petitioner is aggrieved by the cancellation of his registration in terms of the impugned order dated 4th July, 2023. It becomes pertinent to note that the aforesaid order was preceded by what is known as a show cause notice (‘SCN’) dated June 16, 2023. The said SCN reads as follows: –

“Show cause notice for cancellation of registration

Whereas based on the information brought to my attention, it appears that your registration is likely to be canceled for the following reasons:

1. Non-compliance with any specified provision of the GST Act or the rules made thereunder, as may be prescribed.

You are hereby requested to provide a response to the Notice within seven business days from the date of service of this Notice.

You are invited to appear before the undersigned on 06/19/2023 at 10:37 a.m.

If you fail to provide a response within the allotted time or fail to appear for a personal hearing on the scheduled date and time, the matter will be decided ex parte based on the available records and on the merits.

Please note, your registrations are suspended from 06/16/2023

Location: Delhi

Date: 06/16/2023”

2. The petitioner was subsequently served with the impugned final order dated 4th July, 2023, which reads as under:-

“Order canceling registration

This refers to the show cause notice issued dated 16/06/2023.

The effective date of cancellation of your registration is 04/10/2021

3. It may be noted that a registered person furnishing a return under sub-section (1) of section 39 of the CGST Act, 2017 is required to furnish a final return in FORM GSTR-10 within three months of the date of this order.

4. You must provide all your pending returns.

5. It should be noted that cancellation of registration shall not affect the obligation to pay taxes and other assessments under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation, whether or not. these taxes and other assessments are determined before or after the cancellation date.

Location: RANGE – 161
Date: 04/07/2023”

3. As is clear from the above, neither the SCN nor the Final Order assigns or records any reasons in support of the final conclusion which was reached and recorded, namely that the Petitioner had violated the provisions of goods and services. Tax Act 2017 (“GST Act”) or the Goods and Services Tax Rules (2017) (“GST Rules”) boxed below.

4. The SCN remains gloriously silent regarding the provisions of the GST Act that have allegedly been violated or contravened. The above-mentioned position remained unchanged in the final order, which also provides no clue as to which provision of the law may have been violated or contravened. In view of the above, we find ourselves unable to maintain the impugned order.

5. The written request is therefore granted. The contested SCN dated June 16, 2023 and the contested registration cancellation order dated June 4, 2023 are annulled. This order does not, however, prejudice the defendants’ right to initiate new proceedings in accordance with the law.