The Hon’ble High Court of Delhi vide its order dated 07.09.2022 in the matter of M/s Balaji Enterprises Vs. Principal Additional Director General, Directorate General of GST Intelligence & Ors. in W.P. (C) No. – 10315 of 2022, set aside the impugned order and allowed the writ petition, finding that premises of the assessee was physically verified without issuance of notice which was required to be issued as provided under Rule 25 of the CGST Rules, moreover, the impugned order has gone beyond the scope of show cause notice.

The Petitioner filed the writ petition before the Hon’ble High Court challenging the order dated 04.05.2022, whereby the registration of the petitioner was cancelled by the respondents.

Held: –

• The Hon’ble Court after considering the submissions made, facts of the case and after perusal of Show Cause Notice dated 31.03.2022, found that there is nothing stated in the SCN as to why the concerned authority proposed to cancel the registration of the petitioner. Moreover, the onus to show that the registration has been obtained by fraud, wilful misstatement statement or suppression of facts was put on the petitioner.
• It was found by the Hon’ble Court that the concerned authority has not referred to any fact in the SCN, showing that there was fraud, wilful misstatement or suppression of facts, on the part of the petitioner while obtaining the registration.
• Thereafter, following the principles of natural justice, the petitioner was directed to file a reply to the show cause notice within seven days and appear before the concerned authority.
• The petitioner duly filed its reply dated 07.04.2022, stating that ‘all the returns have been duly filed up to February 2022 and all the GST Liability has been properly discharged and all other duly compliances regarding GST compliances has been properly compiled within the stimulated bracket of GST Act 2017. Further the registered place of business FIRST FLOOR, H.NO. 96, ROOM NO.-106, BLOCK-A, WAZIRPUR, WAZIRPUR GROUP, INDUSTRIAL AREA, NORTH WEST DELHI- 110052, is used for office purpose for management of all the administrative and executive activity of M/S SHRI BALAJI ENTERPRISES and stock are manage and kept at warehouse at additional place of business.  Therefore, you are requested to kindly visit and inquiry the entity at current registered and additional place on GST portal/certificate attached herewith, Please make necessary checks and take required actions and then drop the suspension of GSTIN’.
• Subsequently, within less than a month, the impugned order was passed stating that ‘SuoMoto cancellation of the taxpayer was initiated u/s 29(2) of the CGST Act 2017 as per letter DGGI/INV/GST/510/2022-Gr R-0/o Pr ADG-DGGI-ZU-CHEN dated 29.03.2022 received from DGGI, Chennai as an enquiry is pending against the taxpayer in r/o supply of spurious goods. Therefore, registered address of the taxpayer was physically verified by range inspector after approval from competent authority on file and he reported that “no one was found there and door of the premise was found sealed by DGGI Chennai”. The effective date of cancellation of your registration is 31/03/2022, and the amount payable pursuant to the cancellation was mentioned as ‘o’ (Zero).’
• It was found by the Hon’ble Court that a plain reading of the order would show, that the petitioner’s registration was cancelled on account of an enquiry pending against the petitioner, which evidently is being carried out by DGGI, Chennai concerning supply of “spurious goods.”
• Further, it is quite evident from the perusal of the impugned order that the premises of the petitioner were physically verified by the Range Inspector, after receiving approval from the competent authority, and that it was found that the premises had been sealed by DGGI, Chennai. However, neither any notice as required under Rule 25 was given to the petitioner, nor the report of the physical verification was uploaded on the portal.
• It was found that the Hon’ble Court that the SCN did not refer to the aspects, which have been mentioned in the impugned order, cancelling the registration of the petitioner. Moreover, the impugned order shows that nothing was due from the petitioner on account of tax, penalty and interest.
• Lastly, it was found by the Hon’ble Court that certainly there was a violation of Rule 25 of the CGST, and also the impugned order has gone beyond the frame of SCN.

The Hon’ble Court with the above findings allowed the writ petition by setting aside the impugned order, with the directions to the respondents to restore the registration of the petitioner.