The Hon’ble High Court of Delhi vide its order dated 22.12.2022 in the matter of Rekha Saxena Vs. Commissioner of Central Goods and Services Tax Delhi West & Others in W.P.(C) 17568/2022 &CM APPL. 56105/2022, set aside the order cancelling the registration, finding that the order was passed without due application of mind. It was also found that such orders have impact on the registrants and therefore, shall not be passed relying on system generated orders.
The petitioner filed the writ petition before the Hon’ble High Court praying for quashing the impugned orders dated 29.09.2022 and 16.09.2019. Further, prayer was made to declare Rule 21(h) of the CGST rules, 2017 is ultra vires Article 14, 19(l)(g) and 21 of the Constitution of India. It was also prayed to direct the Respondents to revoke the impugned order dated 16.09.2019 and restore the registration of the Petitioner during the pendency of the writ petition.
It was submitted on the behalf of the petitioner that the petitioner is not pressing on the relief sought in the prayer clause (ii) (declaring Rule 21(h) ultra vires). Further, it was stated that the petitioner is not only willing to pay the tax for the period when returns were not filed, but is also agreeable to pay the interest as well as fine, for the delay in filing the returns.
- The Hon’ble Court after considering the submissions made and facts of the case, found that the record shows that the order of cancellation of registration has been passed without due application of mind.
- It was noted by Hon’ble Court that there are two contradictory statements contained in the order. Relevant extract: –
“This has reference to your reply dated 12/09/2019 in response to the notice to show cause dated 02/09/2019.
Whereas the undersigned has examined your reply and submissions made at the time of hearing, and is of the opinion that your registration is liable to be cancelled for following reason(s).
- The taxpayer did not appear for personal hearing nor submitted any reply in response to the online notice send to them for suo motto cancellation of registration.
- From the perusal of the order, it was found by the Hon’ble Court that the concerned officer was not even aware of the fact, as to whether or not a reply had been filed to the show-cause notice dated 02.09.2019. Besides, the order begins with referring to a reply dated 12.09.2019, and then goes on to state that no reply has been filed.
- Further, it appears that the petitioner filed an appeal against the said order after a delay of around 2 years and 8 months from the date of passing order on 24.08.2022. The Appellate Authority vide order dated 29.09.2022 dismissed the appeal filed by the petitioner, mainly on the ground that in terms of Section 107(1) of the CGST Act, 2017, it was barred by limitation.
- In the facts and circumstances of the case, it was found by the Hon’ble Court that orders cancelling registration are a serious matter, they impact the registrants, and therefore, the concerned officer should carefully pen down the orders, and not rely on the system generated orders.
- That in the instant case, it appears that the order dated 16.09.2019 was framed without due application of mind. Therefore, considering the statement given on the behalf of the petitioner, the Hon’ble Court was inclined to give another opportunity to the petitioner.
The Hon’ble High Court with the above findings, set aside the impugned orders dated 29.09.2022 and 16.09.2022 and remitted back the matter to the Appellate Authority to examine the same on merits. The Petitioner will be called upon to deposit the tax, along with interest and fine and only after the Appellate Authority is satisfied that the deficit amount is deposited, will further proceed in the matter and thereafter pass appropriate orders, as deemed fit.