In W.P.(C) 17700/2022-DEL HC- If GST portal cannot be adopted to include further explanation for which proposed action is contemplated, then Notices would be rendered meaningless; Authorities can consider issuing physical SCN: Delhi HC
Justices Vibhu Bakhru & Amit Mahajan [25-01-2023]
New Delhi, February 1, 2023: The Delhi High Court has quashed a Show Cause Notice as it failed to disclose any reason for the proposed action of cancellation of petitioner’s registration under GST Act and was incapable of eliciting a meaningful response from the petitioner.
“The show cause notice must clearly state the allegations that the concerned noticee has to meet”, the Division Bench of Justice Vibhu Bakhru and Justice Amit Mahajan asserted.
The petitioner challenged a Show Cause Notice (SCN) calling upon the petitioner to show cause why its registration under the Goods and Services Tax Act, 2017 not be cancelled. The petitioner also impugned an order canceling the petitioner’s registration pursuant to the said Show Cause Notice.
The petition had been filed on the ground that the SCN did not disclose any reason or ground for proposing cancellation of its registration and therefore none that could be addressed by the petitioner.
The respondents had set up a case that the portal of the concerned officer issuing the impugned SCN reflected the reason in the remarks column which did not form a part of the impugned SCN communicated to the petitioner. It was also submitted that the concerned officer had to select a reason for issuance of the Show Cause Notice, drop down menu in the GST common portal.
Since none of the reasons in the drop down menu were considered apposite, the concerned officer had selected the option others and in the remarks column, he had stated that the registration was proposed to be cancelled on the basis of a letter which was uploaded.
The Bench reaffirmed that Show Cause Notices are not meant to be issued mechanically to comply with a formality and the same are issued to serve the principles of natural justice as well as to enable the concerned authority to take an informed decision.
“The entire purpose of the Show Cause Notice is to enable the noticee to respond to the allegations on the basis of which an action is proposed. Tested on the aforesaid anvil, the impugned SCN does not qualify to be considered as a Show Cause Notice at all”, the Bench held.
The High Court was of the view that the impugned SCN as issued to the petitioner did not have any remarks referring to a letter and also did not mention the contents of the said letter, which would enable the petitioner to discern the allegations against it.
Noting that the submissions that the concerned officer had no option but to choose from a drop down menu, was clearly not the answer to the challenge laid by the petitioner to the impugned SCN, the Bench further added, “In the event, the GST portal cannot be adopted to include further explanation as to the reasons for which the proposed action is contemplated, show cause notices – such as the impugned SCN –would be rendered meaningless and would fail to serve the purpose of issuing a show cause notice, at all.”
Not only this but the Bench also observed that if the concerned authorities found that they were unable to communicate the allegations in respect of which the response was elicited by way of a show cause notice, by selecting the options as available on the electronic system, the concerned authorities might have considered issuing a physical show cause notice.
Thus, allowing the petition, the Bench set aside the impugned SCN and consequentially, the impugned order.
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