There has been yet another case of Goods and Services Tax (GST) authorities canceling a company’s registration for allegedly breaking the laws. The Delhi High Court disapproved of the GST authorities’ decision to deny a company’s request to modify its principal place of business and to terminate its registration on the grounds that the show cause notice (SCN) was issued without a good reason.

It instructed the business to submit the necessary paperwork and data in support of its request for the revocation or cancellation of its GST registration, as requested by the GST authorities.

In June of 2022, Sai Aluminium EXIM, the petitioner, sought for a modification to its GST registration to reflect the change in its principal place of business.

Sai Aluminum asserted that it had not received any SCN suggesting that its modification application be denied. Nevertheless, an order issued in May 2023 denied the petitioner’s application, citing the failure to provide the necessary documentation.

Sai Aluminum asserted that it had not received any SCN suggesting that its modification application be denied. Nevertheless, an order issued in May 2023 denied the petitioner’s application, citing the failure to provide the necessary documentation.

In September 2023, the petitioner was asked to appear before the concerned officer and submit a reply to the SCN within seven working days.

The petitioner’s GST registration was canceled, but the SCN did not specify why. Additionally, it omitted any information regarding the purported fraud, deliberate fraud, or suppression of any facts by the petitioner.

On the other hand, the assistant commissioner of the Anti Evasion Branch’s letter to the petitioner’s GST portal stated that this company was among the taxpayers who were found to be non-existent and asked that proceedings be started in that regard.

Following that, a reasonless order dated September 14 of this year cancelled the petitioner’s GST registration. It only said that the SCN was taken into consideration when passing the contested order.

Even though the SCN did not suggest the petitioner’s GST registration be cancelled immediately, the petitioner’s registration was canceled with effect from July 1.

The petitioner argued that because it did not give any prior notice of an inspection of its premises, the impugned order could be set aside.

The company contended that the SCN’s proposal to cancel its GST registration lacked a rationale, and that as a result, the impugned order is null and void. The court upheld this argument.

According to what was observed, the petitioner had moved its principal place of business and had properly notified the GST authorities by filing the necessary application.

But the application in question was turned down nearly a year later due to missing required information.

The officer in question was instructed by the court to verify that the company is operating from its principal place of business as claimed. If the officer is able to confirm this, the order canceling the GST registration will be revoked.

The GST department appears to be going all out to weed out fraud, according to Sandeep Sehgal, partner tax at AKM Global, which is why registrations are being canceled without providing a speaking order.

The taxpayers are also having trouble obtaining new registrations or changing current ones, as their applications are being turned down for petty reasons. He said, “The case the court decided is an analogous instance where the officers are not even abiding by the fundamentals of natural justice.”

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