HomeLegal AdviceDelhi High Court Questions GST Authorities' Registration Cancellation Without Valid Cause

Delhi High Court Questions GST Authorities’ Registration Cancellation Without Valid Cause

In a recent case, the Delhi High Court has raised concerns over the cancellation of a company’s Goods and Services Tax (GST) registration by authorities without valid reasons. The court found fault with the rejection of the company’s application to change its principal place of business, leading to the cancellation. The order lacked a proper show cause notice (SCN) and specific reasons for the cancellation, prompting the court to direct the company to submit necessary documents in support of its application for revocation.

The petitioner, Sai Aluminium EXIM, stated that it had applied for an amendment to reflect the change in its principal place of business in June 2022. Despite not receiving a show cause notice for the rejection of its application, the company faced cancellation in May 2023, citing the non-submission of the required information.

In September 2023, an SCN proposing cancellation under legal clauses related to fraud and misstatement was issued, lacking specific reasons. The subsequent cancellation order in September did not cite any reason, and it was made retrospective from July 1. The court ruled in favour of the petitioner, emphasising that the impugned order lacked reason and voided the retrospective cancellation without proper notice.

The court directed the concerned officer to verify the company’s business operations at the claimed principal place and, if satisfied, revoke the registration cancellation. Experts, including Sandeep Sehgal from AKM Global, raised concerns about GST authorities cancelling registrations without proper justification, hindering businesses and violating principles of natural justice.

Rugmini Dinu