The SCN does not provide any details regarding wrongful availment of ITC

The Delhi High Court has set aside the GST ( Goods and Services Tax ) registration cancellation, ruling that there was no violation of Section 16 of the Central Goods and Service Tax ( CGST ) Act. The assessee-petitioner, Jai Guru Sudarshan Enterprises has filed the present petition, challenging the order stating the GST registration was cancelled. The order was issued after the issuance of the Show Cause Notice ( SCN ). The GST Proper Officer had issued the impugned SCN proposing to cancel the assessee- petitioner’s GST registration, citing the reason that the petitioner availed ITC ( Input Tax Credit ) in violation of the provisions of Section 16 of the Act or the rules made thereunder, as per Rule 21(e). The petitioner was called upon to respond to the impugned SCN within a period of seven working days from the date of the impugned SCN and was also directed to appear in person before the Proper Officer, who had issued the impugned SCN, on 16.08.2023 at 12:00 PM. The petitioner’s GST registration was also suspended with effect from the date of the issuance of the impugned SCN. The impugned Show Cause Notice ( SCN ) does not clearly articulate the reasons for proposing the cancellation of the petitioner’s GST registration; it only suggests that the petitioner availed ITC in violation of Section 16 of the Central Goods and Services Tax Act, 2017 ( CGST Act ) or the Delhi Goods and Services Tax Act, 2017 ( DGST Act ), but failed to provide any details or explanation of how these provisions were violated, thus lacking intelligible reasons for the proposed cancellation. The bench stated that the purpose of a show cause notice is to enable the recipient to respond to specific allegations that form the basis for proposed adverse action. Therefore, it is essential that the notice clearly outlines the allegations along with all necessary details to facilitate a meaningful response. Without these details, the recipient is left unaware of the case they need to address. If the recipient wishes to contest the notice, their response would likely be a general denial of violating Section 16 of the CGST Act or DGST Act, which would be of limited value to the respondent, noted the Court The division bench of Justice Vibhu Bhakaru and Justice Sachin Datta observed that the impugned order does not provide any reason for canceling the petitioner’s GST registration except to reference the impugned SCN. Consequently, both the impugned SCN and the impugned order were set aside, the petitioner’s GST registration was directed to be restored