Registration Cancellation Order Without Considering The SCN Reply Is Not Sustainable – Delhi High Court

The Hon’ble High Court of Delhi vide its order dated 26th April, 2022 in the matter of Micro Focus Software Solutions India Private Limited Vs. Union of India & Anr. in W.P.(C) 8451/2021, CM Nos.26176/2021 & 28634/2021, held that the order cancelling the registration without considering the reply to show cause notice filed by the petitioner and passed on the basis of physical inspection carried without prior notice to the Petitioner as per Rule 25 of the CGST rules is not sustainable and liable to be set aside.

The Petitioner preferred the writ petition challenging the order dated 09.12.2020 cancelling the registration of the petitioner and order dated 18.02.2021 pertaining to the dismissal of the application for revocation of cancellation.

Facts: –

  • The petitioner was issued with a show cause notice dated 11.11.2020 calling upon to show cause as to the factum of it not being found functioning or existing at the given address.
  • The petitioner was given seven working days to file the reply for the same and to appear (through Authorized Representative) for personal hearing on 16.11.2020 at 11 A.M. However, the petitioner sought extension vide its letter dated 12.11.2020 and requested for a personal hearing on 23.11.2020.
  • The petitioner on 23.11.2020 duly filed a reply to the show cause notice stating that ‘the company was operating from its registered address till November 2019 and thereafter discontinued its business operations in Delhi. Further the cancellation of registration was not applied due to Issuance of credit notes during FY 2020-21 against supplies made upto December 2019, Amendment of incorrect particulars inadvertently reported in GST returns filed during FY 2019-20, Furnishing of Form GSTR-9 and GSTR-9C for FY 2017-18/2018-19 on account of extended due dates & filing of refund claims.  It was submitted that the company will suo-moto apply for cancellation of registration once GSTR-9 and GSTR – 9C is filed, and the refund claim for excess payment of tax made during FY 2018-19 is filed.’
  • Subsequently, the petitioner was issued with the impugned order dated 09.12.2020, cancelling its registration, and later an application being preferred for revocation on 22.12.2020, the same was also dismissed vide order dated 18.12.2021 by the respondents.

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