Notice is mandatory for physical verification of place of business under Rule 25 of the CGST Rules, 2017

[CA Bimal Jain]

The Hon’ble Delhi High Court (“the High Court”) in the case of BIMAL KOTHARI VERSUS ASSISTANT COMMISSIONER (DSGST) & ORS. - 2022 (11) TMI 428 - DELHI HIGH COURT, held that cancellation of GST registration is not sustainable when no notice was serviced upon the registered person for conducting physical verification of business premise under Rule 25 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) which was not given, clearly violating the provision of the law.

Facts:

M/s. Bimal Kothari (“the Petitioner”) is a Goods and Services Tax (“GST”) registered person who shifted his place of business and intimated the GST department with an application stating the new place of business and old place of business in June 2018. However, reference number was not generated resulting non-updation of place of business on common portal. Assistant Commissioner, DSGST (“the Respondent”) issued a show cause notice (“SCN”) dated December 04, 2018, requiring the Petitioner to appear before the concerned officer on December 12, 2018. The Petitioner submitted a reply of such SCN dated December 07, 2018, referring application of change of place of business. However, such a reply was not uploaded on common portal. Therefore, the concerned officer did not consider the said reply. The Respondent vide order dated December 17, 2018, cancelled the GST registration of the Petitioner on account of no business found on physical verification of business premise on the address available with the GST Authority (“the Authority”).

The Petitioner filed a writ petition in the High Court seeking to quash the order of cancellation of GST registration dated December 17, 2018.

Issue:

Whether Authority can conduct physical verification of the business premise without serving notice to the Petitioner under Rule 25 of the CGST Rules?

Held:

The High Court held that:

• Rule 25 of the CGST Rules mandates the GST Authority to issue a notice to the Petitioner before conduct of physical verification of the premise of the assessee. Further, the Rule also mandates Proper Officer to upload a verification report on common portal within 15 days from the date of verification in Form GST REG-30.
• In the present case, the GST Authority has neither issued a notice to the Petitioner for carrying out physical verification of the business premise and nor uploaded the verification report on the common portal within 15 days of conduct of physical verification.
• The same issue was death in the case of Micro Focus Software Solutions India Private Limited Versus Union Of India & Anr. - 2022 (5) TMI 237 - DELHI HIGH COURT, and in case of Curil Tradex Pvt. Ltd. Versus The Commissioner, Delhi Goods And Service Tax & Anr. - 2022 (9) TMI 259 - DELHI HIGH COURT.
• The High Court quashed the order issued by the Respondent dated December 17, 2018 and ordered to restore the GST registration of the Petitioner.

Relevant Provision:

Rule 25 of the CGST Rules

“25. Physical verification of business premises in certain cases. -

Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.”

(Author can be reached at [email protected])