21.02.2022 – Show Cause Notice Quashed Being Bereft Of Any Reason Or Fact, Issued For Suspension Of GST Registration Of The Assessee

www.taxo.onlineThe Hon’ble High Court of Delhi vide its order dated 31st January 2022 in the matter of Shakti Shiva Magnets P. Ltd.  V. Assistant Commissioner & ORS.  in Writ Petition (C) No. – 1559/2022, quashed a show cause notice being bereft of any reason or fact issued for the cancellation of GST registration of the assessee and directed to restore the registration of the assessee.

The Petitioner preferred the Writ Petition before the Hon’ble High Court challenging the show cause notice dated 11 November 2021 issued to the Petitioner for suspension of its GST registration, stating no reason as to why the registration was suspended.

Facts: – The Petitioner GST registration was suspended with the issuance of impugned Show Cause notice dated 11 November 2021.  The aforesaid show cause notice issued for suspension of the GST registration of the Petitioner neither contained any reason or fact nor it was supported by any document, on the basis of which the Petitioner GST registration was suspended.

Petitioner’s Plea: It was contended on the behalf of the Petitioner that its GST registration is suspended for last more than two months.  The Petitioner referring to Rule 21A and rule 22(3) of the Delhi GST rules, 2017 submitted that an assessee registration can be suspended only for 30 days and the cancellation proceedings also need to be finalized in within 30 days.

On the other hand, it was admitted on behalf of the respondents that the impugned Show Cause notice does not contain any reason, fact or document for which the GST registration of the Petitioner was suspended.

Held: – The Hon’ble High Court after considering the submission, fact and law on the subject held that the petitioner GST registration is lying suspended for more than two months on the basis of a Show Cause Notice which is bereft of any reason or fact.

The Hon’ble High Court with the above findings and observations quashed the Show cause notice dated 11 November 2021 and directed the respondents to restore the Petitioner’s registration. However, the permission was given to the respondents to issue fresh show cause mentioning relevant reasons and fact which needs to be replied by the Petitioner’s within 7 workings days from the date of service of fresh show cause notice as per Rule 22 of the DGST Rules.

The Hon’ble High Court while concluding the matter also directed to the Commissioner, Delhi, GST to issue a practice direction so that in future the show cause notice for cancellation of GST registration is not issued without material particulars and reasons.

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