18.11.2022: Cancellation Of Registration On The Basis Of Physical Verification Without Giving Notice Under Rule 25 Not Sustainable – Delhi High Court

The Hon’ble High Court of Delhi vide its order dated 01.11.2022 in the matter of Bimal Kothari Vs. Assistant Commissioner (DSGST) & Ors. in W.P.(C) 9207/2019 & CM No.37947/2019, set aside the order cancelling the registration of the assessee on the basis of physical verification, which was carried on without giving a notice under Rule 25 to the assessee.  Further the verification report in Form GST REG – 30 was not uploaded on the common portal as required under Rule 25.

The Petitioner filed the writ petition before the Hon’ble High Court challenging order dated 17.12.2018 passed by the Respondent authority, whereby the GST registration of the petitioner was cancelled.

Facts of the Case: –

  • The Petitioner was served with a show cause notice dated 04.12.2018 requiring him to appear before the concerned authority on 12.12.2018 at 11:03 A.M.
  • That the registration of the petitioner was cancelled on the basis that the petitioner was not found to be in existence at the address available with respondents, and this fact was not disputed on the behalf of the respondents.

Petitioner’s Submissions: –

  • It was submitted on the behalf of the petitioner that in June 2018, an application was filed with the concerned authority indicating the fact that the petitioner had relocated it principal place of business.
  • To support its stand, the attention was drawn to the reply dated 07.12.2018, which was filed in response to the show cause notice dated 04.12.2018.

On the other hand, it was submitted on the behalf of the respondents that the application could not have been considered since a reference number was not generated.  Further reply dated 07.12.2018 could not be considered by the concerned authority as the same was not uploaded on the designated portal.  It cannot be disputed on the behalf of the respondents that the counter affidavit is silent on the aspect, that Rule 25 provides for a statutory regime in cases where the proper officer is satisfied that physical verification of the assessee’s business premises is required to be carried out.

Held: –

  • The Hon’ble Court after considering submissions made, facts of the case and the law applicable, found that reply filed by the petitioner does indicate that the petitioner took the stand that there was a relocation of its place of business. Hence, both the addresses i.e., one available with the respondents and new address were mentioned in the reply dated 07.12.2018.
  • The Hon’ble Court taking note of Rule 25 of the CGST rules, found that on perusal of the said rule it is quite evident that where a proper officer is satisfied that physical verification of the place of business of a person is required due to failure of Aadhaar authentication, before the grant of registration or due to any other reason after the grant of registration, such physical verification of the place of business, if deemed necessary, is to be carried out in the presence of the said person.
  • It was also found that after physical verification, a report in that regard in FORM GST REG – 30, is to be generated and uploaded on the common portal within 15 days following the date of such verification.
  • That in the instant matter, it is evident that the concerned officer before passing the impugned order cancelling the registration of the petitioner deemed it necessary to carry out physical verification of the petitioner’s place of business. However, admittedly not notice was issued to the petitioner as required under Rule 25 for his presence at the time of verification.
  • Moreover, no verification, though generated, was uploaded on the common portal in FORM GST REG-30, for which period specified is 15 days from the date of physical verification.
  • Lastly, it was found by the Hon’ble Court that the issued involved in the instant matter stands covered by the judgments of this Court in the matter of Micro Focus Software Solutions India Pvt. Ltd. v. Union of India & Anr. – W.P.(C)No.10408/2022 – Judgment dated 26.04.2022 & in Curil Tradex Pvt. Ltd. v. The Commissioner, Delhi Goods And Service Tax & Anr. – W.P.(C)No.10408/2022 – Judgment dated 26.08.2022

The Hon’ble Court with the above findings, disposed of the writ petition holding that the impugned order cancelling the petitioner’s GST registration is not sustainable and therefore, the GST petitioner’s registration shall stand restored. That the respondents/revenue would provide eight weeks’ time to the petitioner to upload the returns for the period during which its registration stood cancelled.

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