Delhi HC Rules: Mere Issuance of SCN Not Enough to Cancel GST Registration

The Delhi High Court has ruled that simply issuing a Show Cause Notice (SCN) is insufficient to cancel the Goods and Services Tax (GST) registration of an entity. The judgment emphasizes that authorities must provide specific reasons and give the taxpayer an opportunity to be heard, thereby upholding the principles of natural justice.

In the case involving Subhana Fashion, the court invalidated the GST registration cancellation, stating that the SCN did not offer “intelligible reasons” and that non-payment of dues for three months is not a valid ground for cancellation.

Key Highlights:

SCN Details Required: SCNs must contain detailed reasoning and an opportunity for a personal hearing, as emphasized in earlier rulings like the M/s Chauhan Construction Co case.

Retrospective Cancellation Scrutinized: The court stressed that retrospective cancellation requires solid evidence, as highlighted in the Shree Bankey Bihari Trading Company case.

Natural Justice: The court pointed out that cancellation orders must not go beyond the reasons mentioned in the SCN, reiterating that any additional grounds violate the principles of natural justice.

The Delhi HC rulings aim to clarify the ambiguities surrounding GST registration cancellations and reinforce the necessity of fairness in tax proceedings.

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