The Delhi High Court has quashed the cancellation of Goods and Services Tax (GST) registration of M/s Chauhan Construction Co., citing the lack of specific particulars in the Show Cause Notice (SCN) issued by the Commissioner of DGST. The bench, comprising Justice Vibhu Bakhru and Justice Sachin Datta, emphasized that administrative actions that do not adhere to the principles of natural justice cannot be upheld.
Background of the Case
The petitioner, M/s Chauhan Construction Co., represented by its proprietor Rajesh Chauhan, filed a writ petition (W.P. (C) 12506/2024) challenging the order dated April 5, 2021, which cancelled its GST registration. The cancellation was based on a Show Cause Notice (SCN) dated March 26, 2021. The notice alleged that the petitioner had “issued invoices or bills without supply of goods and/or services in violation of the provisions of the GST Act,” leading to the wrongful availment or utilization of input tax credit or tax refunds. However, the notice did not provide any specific details or evidence to substantiate these allegations.
The petitioner was represented by Advocate Mr. Vineet Bhatia, while the respondents, including the Commissioner of DGST, were represented by Advocates Mr. Aviskar Singhvi, Mr. Vivek Kr Singh, Mr. Naved Ahmed, and Mr. Shubham Kumar.
Key Legal Issues Involved
The main legal issue before the court was whether the SCN and subsequent cancellation order violated the principles of natural justice due to a lack of specific details. The petitioner argued that the SCN failed to provide any intelligible reason or evidence for the proposed cancellation, depriving them of an opportunity to respond effectively. Moreover, the SCN did not specify a date, time, or venue for the mandatory personal hearing, further compounding the procedural irregularities.
Justice Vibhu Bakhru noted that the lack of particulars in the SCN and the absence of a clear opportunity for a personal hearing were contrary to the principles of natural justice, which require that a party must be given a fair chance to present its case.
Court’s Observations and Decision
The Delhi High Court found that the SCN issued to M/s Chauhan Construction Co. was “bereft of any particulars” and failed to provide “any clue to the taxpayer as to the reasons for cancellation of the petitioner’s GST registration.” The court observed that while the SCN mentioned the legal provision allowing for cancellation, it did not explain the specific grounds or facts that warranted such action.
The bench also noted that the subsequent notices issued to the petitioner, including those dated December 29, 2021, and July 19, 2023, suffered from similar deficiencies. These notices did not mention any date, time, or venue for a personal hearing, and the reasons provided were vague and non-specific. For instance, one notice merely stated, “The reason entered for revocation of cancellation is not appropriate,” without further explanation.
Quashing the GST cancellation order, the court stated: “The impugned cancellation order is void as it was passed in violation of the principles of natural justice. The petitioner was not provided any intelligible reasons for proposing to cancel its GST registration and was not afforded an opportunity of being personally heard.”
Final Directions of the Court
In light of these observations, the court set aside both the impugned cancellation order and the SCN, directing the respondents to restore the petitioner’s GST registration immediately. The court further instructed the petitioner to file any due GST returns within thirty days and to pay any outstanding taxes, along with interest and penalties, if applicable.
Justice Bakhru clarified that while the court quashed the cancellation order, this did not preclude the authorities from initiating fresh action against the petitioner in compliance with the law, should there be any statutory violations or dues to be recovered.
Case Details
Case Title: M/s Chauhan Construction Co. Through its Proprietor Rajesh Chauhan vs. Commissioner of DGST and Anr.
Case No.: W.P. (C) 12506/2024
Bench: Justice Vibhu Bakhru and Justice Sachin Datta
