The Delhi High Court has overturned the cancellation of the GST registration for M/s Chauhan Construction Co., citing that the Show Cause Notice (SCN) issued by the Commissioner of DGST lacked essential details. The bench, consisting of Justice Vibhu Bakhru and Justice Sachin Datta, ruled that the administrative process violated the principles of natural justice.
Background of the Case:
The case involved M/s Chauhan Construction Co., owned by Rajesh Chauhan, which challenged the cancellation of its GST registration through a writ petition (WP (C) 12506/2024). The GST registration was canceled on April 5, 2021, following a Show Cause Notice issued on March 26, 2021. The notice alleged that the company had issued invoices without supplying goods or services, which led to the wrongful utilization of input tax credit. However, the notice failed to provide any specific details or evidence to support these claims.
Represented by Advocate Mr. Vineet Bhatia, the petitioner argued that the SCN was vague and lacked concrete reasons for the cancellation. Moreover, it did not specify a date, time, or venue for a mandatory personal hearing, thus denying them the opportunity to defend themselves effectively. The respondents, including the Commissioner of DGST, were represented by Advocates Mr. Aviskar Singhvi, Mr. Vivek Kr Singh, Mr. Naved Ahmed, and Mr. Shubham Kumar.
Legal Issues:
The central issue was whether the cancellation of the GST registration violated the principles of natural justice, given that the SCN lacked crucial details. The court agreed with the petitioner, highlighting that the notice did not offer any clear reason or evidence for the proposed cancellation.
Justice Bakhru noted that the absence of details and the failure to schedule a personal hearing went against natural justice, where every party is entitled to a fair opportunity to present its case.
Court’s Decision:
The Delhi High Court ruled that the SCN was devoid of necessary particulars and failed to inform the taxpayer about the reasons for the cancellation. Further notices issued on December 29, 2021, and July 19, 2023, were similarly flawed, as they also lacked specific details and failed to arrange for personal hearings.
In its judgment, the court declared the cancellation order void for violating natural justice. The court instructed that the GST registration of M/s Chauhan Construction Co. be restored immediately and allowed the petitioner to file any outstanding GST returns within 30 days. Additionally, the petitioner must pay any due taxes along with interest and penalties, if applicable.
While quashing the order, the court clarified that authorities are not barred from initiating fresh proceedings against the petitioner, provided they adhere to the law and procedural fairness.
Case Details:
Case Title: M/s Chauhan Construction Co. Through its Proprietor Rajesh Chauhan vs. Commissioner of DGST and Others
Case No.: WP (C) 12506/2024
Bench: Justice Vibhu Bakhru and Justice Sachin Datta
This ruling underscores the importance of adherence to natural justice, ensuring that individuals and businesses are given a fair chance to defend themselves in any administrative actions.
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