The Delhi High Court has quashed the show cause notice (SCN) and the order cancelling the GST registration on the grounds of non-conducting of business which was contrary to physical verification report submitted by the GST Inspector.

The bench of Justice Prathiba M. Singh and Justice Dharmesh Sharma has observed that the SCN stated that the firm is not conducting any business from the declared place of business, which is contrary to the physical verification report provided by the GST inspector in terms of the Rule 25 of the CGST Rules, 2017. The report clearly recorded that at the time of the physical verification, the Petitioner himself was present and he was dealing in scrap material and the firm was also found functioning. 

The petitioner has challenged the Show Cause Notice and the subsequent cancellation of the GST registration of the Petitioner. In the SCN, the Petitioner was given a date for appearance. Pursuant to the SCN, the Petitioner filed a reply based on which the Department had dropped the proceedings against the Petitioner.

The court noted that the allegation is that the firm is involved in passing off inadmissible ITC without actual supply of goods and services. However the letter based on which the said allegation is raised has not been furnished to the Petitioner.

The Petitioner has neither been given the proper material nor has a hearing been given. The cancellation of GST registration can have adverse consequences on the Petitioner who would find it challenging to conduct his business. The show cause notice is completely cryptic. 

The court held that the allegation is that the firm is involved in passing off inadmissible ITC without actual supply of goods and services. However the letter based on which the said allegation is raised has not been furnished to the Petitioner. The Petitioner has neither been given the proper material nor has a hearing been given. The cancellation of GST registration can have adverse consequences on the Petitioner who would find it challenging to conduct his business. The show cause notice is completely cryptic. 

Case Details

Case Title:  Rashid Proprietor Of Ms Enterprises Versus Union Of India 

Case No.:  W.P.(C) 1635/2025 & CM APPL. 7966/2025

Date: 11th February, 2025

Counsel For Petitioner: Dipak Raj

Counsel For Respondent: Piyush Beriwal

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