2022 (2) TMI 191 - HC - GST

Cancellation of petitioner s GST registration - Rule 21A as well as Rule 22(3) of the Delhi GST Rules, 2017 - HELD THAT - Since in the present case, petitioner s registration has been lying suspended for more than two months on the basis of a show cause notice which is bereft of any reason or fact, this Court quashes the impugned show cause notice dated 11th November, 2021 and directs the respondents to restore the petitioner s registration forthwith. However, the respondents are permitted to issue a fresh show-cause notice mentioning all the relevant facts and reasons within a week. The same shall be responded to by the petitioner within a period of seven working days from the date of the service of such notice (Rule 22, DGST). The Commissioner, Delhi, GST, is also directed to issue a practice direction so that in future, if any show-cause notice for cancellation of GST registration is issued, the same is not bereft of any material particulars or reasons. Petition disposed off.

Summary

Issues:
1. Validity of the show-cause notice for suspension of GST registration.
2. Compliance with Delhi GST Rules regarding suspension and cancellation of registration.
3. Restoration of petitioner's GST registration.
4. Directions for issuance of practice direction by the Commissioner, Delhi GST.

Issue 1: Validity of the show-cause notice for suspension of GST registration:
In the case, the petitioner challenged the impugned show-cause notice dated 11th November, 2021, contending that it lacked any factual basis or reasons for the suspension of GST registration. The petitioner's representative acknowledged the deficiencies in the notice and requested time to issue a fresh detailed notice. However, the Court observed that the notice was deficient and quashed it, directing the respondents to restore the petitioner's registration immediately. The Court allowed the respondents to issue a fresh show-cause notice within a week, with all relevant facts and reasons, to which the petitioner must respond within seven working days.

Issue 2: Compliance with Delhi GST Rules regarding suspension and cancellation of registration:
The Court considered Rule 21A and Rule 22(3) of the Delhi GST Rules, 2017, which specify that an assessee's registration can only be suspended for thirty days, and cancellation proceedings must be concluded within the same period. Since the petitioner's registration had been suspended for over two months based on a deficient notice, the Court intervened and directed the restoration of registration. The judgment emphasized the importance of adhering to the prescribed timelines and procedures as per the GST Rules.

Issue 3: Restoration of petitioner's GST registration:
As a result of the Court's findings on the inadequacy of the show-cause notice and the prolonged suspension of registration, the Court ordered the immediate restoration of the petitioner's GST registration. The respondents were instructed to take necessary steps to reinstate the registration promptly. Additionally, a timeline was set for the issuance of a fresh show-cause notice and subsequent decision-making process to ensure compliance with the law.

Issue 4: Directions for issuance of practice direction by the Commissioner, Delhi GST:
In the judgment, the Court directed the Commissioner, Delhi GST, to issue a practice direction to ensure that any future show-cause notices for the cancellation of GST registration are comprehensive and include all material particulars and reasons. This directive aimed to prevent the issuance of deficient notices in the future and emphasized the importance of providing clear justifications when taking such actions. The Court's decision sought to establish a standard practice for handling similar cases in the future.

This comprehensive analysis of the judgment highlights the key issues addressed by the Court, the legal principles applied, and the specific directives issued to the concerned parties for compliance with the law and procedural requirements.