The SCN failed to provide specific allegations of fraud, misstatement, or suppression of facts

In a recent ruling, the Delhi High Court has set aside the cancellation of Goods and Service Tax registration, ruling that the Show Cause Notice ( SCN ) failed to provide specific details regarding the alleged fraud or misstatement. The court found that the cancellation order was unsustainable due to a breach of natural justice principles. The petitioner has filed a petition challenging the order dated 21.05.2024, which retrospectively cancelled their Goods and Services Tax (GST) registration from 03.07.2017. This cancellation order followed a Show Cause Notice (SCN) dated 29.04.2024. Get a Copy of GST on Services Ready Reckoner, Click here The SCN cited the grounds for cancellation under Section 29(2)(e) of the CGST Act, which pertains to registration obtained through fraud, wilful misstatement, or suppression of facts. The petitioner was directed to respond within seven working days and to appear before the proper officer on 06.05.2024 at 12:35 PM. The GST registration was suspended from 29.04.2024. The petitioner was registered under the CGST Act and the DGST Act with GSTIN: 07AUPPK2390E121. A previous SCN dated 05.09.2023 had also proposed cancellation of the GST registration on similar grounds, leading to an order dated 22.09.2023. The cancellation order was subsequently revoked on 02.11.2023 following the petitioner’s application. The respondent’s counsel Ms. Monica Benjamin argued that the impugned SCN was reissued based on directives from the Anti-Evasion Branch, which necessitated cancellation of the GST registration. The cancellation was purportedly in compliance with these directives. The court found that the impugned order was unsustainable due to a breach of natural justice principles. The SCN lacked specific details required to enable a meaningful response from the petitioner. It failed to outline particular allegations of fraud, misstatement, or suppression of facts, and did not indicate whether the cancellation was proposed retrospectively. The division bench of Justice Vibhu Bhakru and Justice Sachin Datta determined that the impugned cancellation order violated principles of natural justice. The petition was thus allowed, the cancellation order was set aside, and the respondent was directed to restore the petitioner’s GST registration immediately. The order does not prevent the respondent from pursuing further statutory actions or recovery of dues as per the law. Get a Copy of GST on Services Ready Reckoner, Click here The petition was disposed of with the cancellation order being set aside and the GST registration reinstated. The decision permits the respondent to initiate any future proceedings for statutory violations or dues recovery, if necessary.