UMESH vs UNION OF INDIA & ANR.
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 11.09.2024
+ W.P.(C) 831/2024
UMESH …..Petitioner
Through: Mr. Kanhaiya Singhal, Mr. Ujwal Ghai, Mr. B. Bhola, Mr. Udit Bakshi, Ms. Vani Singhal, Mr. Ajay Kumar & Mr. Aaditya Saraf, Advs.
Versus
UNION OF INDIA & ANR. …..Respondents
Through: Mr. Anurag Ojha & Mr. Shubham Kumar, Advs.
Mr. Bhagwan Swaroop Shukla & Mr. Sarvan Kumar, Advs. for UOI.
CORAM:
HON’BLE MR. JUSTICE VIBHU BAKHRU
HON’BLE MR. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J. (Oral)
CM No.50541/2024 (for early hearing)
1. For the reasons stated in the application, the same is allowed.
2. The application is disposed of.
W.P.(C) 831/2024
3. With the consent of the learned counsel for the parties, the petition is taken up for hearing today itself.
4. The petitioner has filed the present petition impugning a Show Cause Notice dated 22.12.2023 (hereafter the impugned SCN) whereby the petitioner was called upon to show cause as to why his registration not be cancelled. The reason set out in the impugned SCN reads as under:
1 As per letter GEXCOM/AE/MISC/764/2023/PT dated 06.11.2023 issued by Deputy Commissioner, AE, CGST, DW, New Delhi, during the physical verification principal place of business fund non existent. The cancellation of GSTIN is initiated under section 29 of CGST Act,2017.
5. The petitioner was called upon to furnish a reply to the impugned SCN within a period of seven working days from the date of service of the said notice. He was also called upon to appear before the proper officer on 29.12.2023 at 2:30 PM. Additionally, the petitioners GST registration was suspended from the date of the impugned SCN, that is, from 22.12.2023.
6. The petitioner submits that the impugned SCN was issued solely on the premise that the petitioners principal place of business was found to be non-existent at the time of physical verification. He submits that no prior notice was issued to the petitioner before physical verification was conducted and the conclusion that the petitioners principal place of business was found non-existent is ex facie erroneous as the field report indicates otherwise.
7. The petitioner obtained his registration under the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) with effect from 02.05.2022 and was assigned the Goods & Services Tax Identification Number (GSTIN) 07ANTPU1251H1ZM. The petitioner was issued a Show Cause Notice dated 07.08.2023 calling upon the petitioner to show cause why his registration not be cancelled. The only reason stated in the said Show Cause Notice dated 07.08.2023 reads as under:
1 Non compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed.
8. It is apparent from the above that the Show Cause Notice dated 07.08.2023 was vague and bereft of any particulars. Thus, it was incapable of eliciting any meaningful response. Notwithstanding the same, the proper officer issued an order dated 25.08.2023 cancelling the petitioners GST registration with retrospective effect from 05.05.2022. The said order did not mention any reason whatsoever for cancelling the petitioners GST registration. It merely refers to the Show Cause Notice dated 07.08.2023.
9. In the aforesaid context, the petitioner applied for revocation of the order dated 25.08.2023, which was allowed by an order dated 30.10.2023.
10. Notwithstanding that the order cancelling the petitioners registration was revoked by the proper officer on 30.10.2023, the proper officer once again issued the impugned SCN.
11. It is in the aforesaid background that the petitioner filed the present petition impugning the impugned SCN. The present petition was listed before this Court for the first time on 19.01.2024. It is the petitioners case that the impugned SCN has been issued on an ex facie erroneous conclusion that the petitioners principal place of business was found to be non-existent. To cut short the controversy, a Coordinate Bench of this Court by an order dated 19.01.2024 directed the respondents to carry out a physical inspection of the premises of the petitioner. The relevant extract of the said order is set out below:
1. Petitioner impugns show cause notice dated 22.12.2023, whereby the petitioner has been required to show cause as to why his GST registration be not cancelled.
2. The subject show cause notice has been issued on the ground that during physical verification, the principal place of business was found to be non-existent. Learned counsel for the petitioner submits that petitioner is very much existent at the subject premises.
3. It is noticed that though the show cause notice requires the petitioner to appear before the undersigned, however, there is no name and designation of the officer is mentioned in the show cause notice.
4. Be that as it may, since the respondents have entered appearance, we direct that respondents shall carry out a fresh physical inspection of the premises of the petitioner.
5. Mr. Ojha, learned counsel for respondents submits that appropriate notice shall be given to the petitioner before carrying out inspection.
6. In view of the above, list on 01.02.2024.
12. This Court is informed that pursuant to the aforesaid order, the premises of the petitioner were once again inspected on 23.01.2024. The Field Visit Report dated 23.01.2024 (hereafter the Field Report) filed by the respondents indicates that the petitioners premises were found to be in existence. It was also found that stock belonging to the petitioner was stored in the premises. The signboard outside the premises also clearly mentions Umesh Traders and mentions the petitioners GSTIN. However, the petitioner was not present at the premises during the time of physical verification.
13. It is stated that the petitioner did not come to the premises even after the concerned officer contacted him telephonically. However, a lawyer appeared and handed over the Rent Agreement, the petitioners Aadhar Card, Pan Card and Tax invoice. Apparently, the concerned Field Officer also made enquiries from nearby shop owners whose names are not disclosed in the Field Report. The said shop owners informed the Field Officer that the petitioners shop was opened only three or four days ago. On the aforesaid basis, the respondents have filed a counter affidavit affirming that on physical verification, the petitioners principal place of business was found to be non-existent. This is premised solely on the basis of the Field Report.
14. We find merit in the petitioners contention that his premises were in existence at the time of physical verification and the respondents conclusion that petitioners principal place of business was non-existent at the time of physical verification is ex facie erroneous. The respondents conclusion is premised solely on the basis of purported enquiries made from the nearby shop owners. However, the Field Report does not mention the name of the said shop owners or any other details.
15. We find it difficult to countenance that a taxpayers registration can be cancelled solely on the basis of some general queries/enquiries from random persons, of which there is no record. In this case the petitioners premises are found to be in existence and the sign board outside the premises also bears the petitioners GSTIN. The Field Report also encloses a photograph of a person in front of the premises of the petitioner. Mr. Ojha, learned counsel appearing for the respondents submits that the person as reflected in the photograph is the petitioners employee.
16. In our view, the same establishes that the petitioner was in possession of the premises in question at the material time. The proper officer entertains an apprehension that the petitioner was non-existent at the principal place of business three or four days prior to the date of the physical inspection. It is the petitioners contention that the shop in question was lying closed and was opened four or five days before the date of the physical inspection as, prior to that, the petitioners GST registration was suspended.
17. In the aforesaid circumstances, we consider it apposite to direct the petitioner to file a response to the impugned SCN along with all documents relied upon by him so as to establish that his principal place of business is in existence since the date of its registration. The proper officer shall consider the reply of the petitioner and shall take an informed decision thereon. We also clarify that the proper officer shall not rely on the Field Report as establishing that the petitioner was non-existent at the principal place of business as affirmed in the counter affidavit filed by the respondent. The conclusion arrived at by the respondents, on the basis of the Field Report, is ex facie erroneous as the same is without any documentary evidence to substantiate the same and is based merely on purported oral statements of nearby shop owners whose names are not even mentioned in the Field Report and hence, the same cannot be relied upon. Accordingly, we find no ground to sustain the suspension of the petitioners GST registration on the basis of the Field Report.
18. The respondents are directed to forthwith restore the petitioners GST registration. The petitioner shall file a reply to the impugned SCN along with requisite documents as directed above within a period of two weeks from date. The proper officer of the respondents shall take an informed decision within a period of two weeks thereafter.
19. The petition is disposed of in the aforesaid terms.
20. The hearing already scheduled of 11.11.2024 stands cancelled.
VIBHU BAKHRU, J
SACHIN DATTA, J
SEPTEMBER 11, 2024
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W.P.(C) 831/2024 Page 2 of 2