The Hon’ble Delhi High Court in Deepak Sharma v. Commissioner Department of Trade and Taxes Govt of NCT Delhi [W.P.(C) 4922 of 2025 dated April 17, 2025], granted relief to the Assessee wherein the Assessee GST registration was prolonged on account of non-conclusion of the SCN proceedings for cancellation of GST registration by directing that the proceedings should be completed within stipulated time and a personal hearing should also be granted to the Assessee, as the Hon’ble High Court opined that the “cancellation of GST registration can completely bring the business of any entity or individual to a standstill”.
Facts:
Deepak Sharma (“the Petitioner”) has filed writ petition against SCN dated March 19, 2025 (“the Impugned SCN”) issued, by the Commissioner, Department of Trade and Taxes, Government of NCT of Delhi (“the Respondent”) wherein the SCN was issued for cancellation of GST Registration of the Petitioner. Subsequently, the GST registration was suspended from the date of issuance of SCN.
Issue:
Whether the prolonged suspension of GST registration without conclusion of SCN proceedings is valid in law?
Held:
The Hon’ble Delhi High Court in the case of W.P.(C) 4922 of 2025 held as under:
- Noted that, the cancellation of GST registration can completely bring the business of any entity or individual to a standstill.
- Held that, the proceedings in the Impugned SCN shall be completed at the earliest and in any case within a period of 45 days from the date of passing of the Hon’ble High Court Order.
- Directed that, a personal hearing shall be given to the Petitioner and the notice for same shall be uploaded on the portal and be communicated on the e-mail as well.
Our Comments:
Also, the Hon’ble Gauhati High Court in the case of Motaleb Bhuyan v. State of Assam and Ors. [WP(C)/2244/2024 dated March 11, 2025] observed that “a conjoint reading of Section 29 with Rule 22 and the FORMS GST REG-17, GST REG-18, GST REG-19 and GST REG-20 would show that the Proper Officer can cancel the registration under Sub Section (2) of Section 29 only on the grounds stipulated in Sub-Clauses (a) to (e) of Section 29(2) and before doing so, an opportunity of hearing has to be given to the person. Sub-Section (3) of Section 29 further stipulates that till the date of cancellation of the registration, the person in whose favour the registration was, has to pay tax and other dues under the Act or to discharge any obligations under the Act or the Rules made thereunder. It would also transpire from a reading of Rule 22 of the Central Rules that not only show cause notice is required to be issued in the format as stipulated in Form GST REG-17 but also a date of hearing is required to be fixed. Therefore, it would be seen that the opportunity which is to be granted has to be an opportunity in real sense and not a mere formality. Further to that, it is a well settled principle of law that when a show cause notice is issued, the show cause notice has to specify clearly and without any ambiguity the reasons as to why the show cause notice have been issued in terms with Form GST REG-17. It is trite that if the said show cause notice is vague, the very initiation of the proceedings on the basis of the said show cause notice would become redundant. More so, when a combine reading of the aforementioned provisions clearly stipulate that the person has to be given an opportunity to be heard and this opportunity of giving a hearing includes an issuance of a show cause notice and a personal hearing”.
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