In the case of Bimal Kothari vs Assistant Commissioner (DSGST) the Hon'ble Delhi High Court set aside the order canceling the petitioner's registration on the grounds of a physical verification conducted without prior notice.
Fact of the Case-
The registration was cancelled due to the fact that the petitioner was not found to be at the address.
This writ petition concerns a show cause notice served on a petitioner, who was then required to appear before the concerned authority on a particular date and time
Contention of Petitioner's-
The petitioner claimed that an application was filed in June 2018 to indicate that the principal place of business had been relocated, and a reply sent in December 2018 responded to the show cause notice.
Mr Boudhayan Bhattacharya, who appears on behalf of the petitioner, has drawn attention to the reply dated 07.12.2018. This reply was sent, according to the petitioner, in response to the show cause notice dated 04.12.2018.
Contention of Respondent-
The application was not considered due to a lack of a reference number, and the reply was not uploaded to the portal, neither could be taken into account.
The counter-affidavit does not mention the physical verification report dated 04.12.2018, which would be required under Rule 25 of the Central Goods and Services Tax Rules, 2017.
Held that-
The Hon'ble High court held that the said rule provides that where a proper officer is satisfied that physical verification of the place of business of a person is required due to failure of Aadhaar authentication, before the grant of registration or due to any other reason after the grant of registration, such physical verification of the place of business, if deemed necessary, is to be carried out in the presence of the said person.
It cannot be disputed that Rule 25 provides for a statutory regime in cases where the proper officer is satisfied that physical verification of the assessee’s business premises is required to be carried out. The counter-affidavit is silent on this aspect.
Moreover the physical verification of the petitioner's business premises was carried out without issuing any notice to the petitioner and the verification report generated was not uploaded on the common portal within 15 days of verification, as required.
Furthermore, it appears that the verification report, though generated, has not been uploaded, as required, in FORM GST REG-30 on the common portal.
The court referred to Micro Focus Software Solutions India Pvt. Ltd. v. Union of India & Anr. and Curil Tradex Pvt. Ltd. v. The Commissioner, Delhi Goods And Service Tax & Anr. and ruled that the cancellation of registration is not valid as the provisions of Rule 25 of the Central Goods and Services Tax Rules, 2017.
“Rule 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.”
In the case of Micro Focus Software Solutions India Private Limited Versus Union of India the Hon'ble Delhi High Court set aside the order canceling the petitioner's registration on the grounds of that an inspection was carried out on the petitioner's premises without proper notice, and there was no tax outstanding.
Fact of the Case-
Cancellation of GST registration of the petitioner on the basis of not being found functioning or existing at the given address and the dismissal of the application for revocation of cancellation.
The petitioner was issued a show cause notice dated 11.11.2020, calling upon them to show cause as to why their registration should not be cancelled.
The petitioner was given seven working days to reply of show cause notice.
Contention of Petitioner's-
The petitioner responded via a reply, seeking an extension of time for a personal hearing.
There was a complete violation of principles of natural justice. According to Rule 25 of the Central Goods & Service Tax Rules, 2017, notice had to be given to the petitioner before carrying out physical inspection, but that notice was not given.
The report of physical inspection was not submitted even after the order was passed.
Contention of Respondent-
Mr. Sameer Vashisht, who appears on behalf of respondent, argued that there is a discrepancy and/or contradiction as to when the petitioner closed down their business at the given address.
He also argued that the petitioner was given an opportunity to respond to the show cause notice and since there was no response, the registration was cancelled.
Furthermore, Mr Vashisht says since the order rejecting the revocation application has been passed, the petitioner should be relegated to an alternate statutory remedy.
Held that-
The judges have determined that orders, dated 09.12.2020 and 18.02.2021, must be set aside.
They have noted that the petitioner had requested an extension of time to respond to a show cause notice, which was granted for seven working days. The petitioner filed a reply on the seventh working day, but it was not referred to in the first impugned order.
Moreover, the judges also observed that an inspection was carried out on the petitioner's premises without proper notice, and there was no tax outstanding.
Hence, the petitioner's registration be revived, and that the petitioner may apply for de-registration once the purpose of the registration is over. They have directed the registry to scan and upload a document dated 09.03.2022 to the case file for good order and record.
In the case of Curil Tradex Pvt. Ltd. Versus The Commissioner, Delhi Goods and Service Tax the Hon'ble Delhi High Court set aside the order canceling the petitioner's registration on the grounds of that the photographs produced by the respondents/revenue could not be relied on as they did not form part of the show cause notice or the impugned order.
Fact of the Case-
Contention of Petitioner's-
The impugned order cannot be sustained as the respondents/revenue now accepted that the letter was not furnished to the petitioner and that no notice of inspection was served.
The petitioner also claimed that the physical verification of the business premises could only be carried out in the presence of its authorized representative after prior notice/intimation was served by the proper officer, relying on Rule 25 of the Central Goods and Service Tax Rules, 2017.
Contention of Respondent-
Held that-
The court observed that neither was the letter dated 06.04.2022 furnished to the petitioner nor was the petitioner given any notice of inspection.
As per Rule 25 of the 2017 Rules provides that if physical verification is required after the grant of registration, the proper officer may get such verification carried out in the presence of the person concerned and have the verification report and other documents, including photographs, uploaded.
Based on these observations, the court held that the impugned order could not be sustained in law as the principles of natural justice were not adhered to.
The court also stated that the photographs produced by the respondents/revenue could not be relied on as they did not form part of the show cause notice or the impugned order.
The court set aside the impugned order and directed the respondents/revenue to consider the matter afresh in accordance with law.
Team Taxonation
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