GST Registration cannot be cancelled due to Non presence of taxpayer at the premises of business.

Case Title: Bimal Kothari v. Assistant Commissioner (DSGST)

Court: High Court of Delhi

Petition No.: W.P.(C) No. 9207 of 2019, CM No. 37947 of 2019

Category of Dispute: GST Registration Cancellation

Date of Judgment: November 1, 2022

Relevant Section: Rule 25 of CGST Rules, 2017

Judges: Rajiv Shakdher & Ms. Tara Vitasta Ganju, JJ.

Facts of the Case:

1. The petitioner challenged the cancellation of his GST registration via order dated 17.12.2018 passed by the Assistant Commissioner (DSGST)
2. A show cause notice was issued on 04.12.2018, requiring appearance on 12.12.2018. The cancellation was based on non-existence at the registered address.
3. The petitioner asserted that he had filed an application for change in address around June 2018, and responded to the SCN on 07.12.2018, disclosing the new business location.
4. The department contended that since no reference number was generated for the amendment application and the reply wasn’t uploaded on the portal, they were not considered.
5. Physical verification was cited, but the respondent admitted non-compliance with Rule 25 of the CGST Rules regarding notice, presence of the assessee, and uploading of Form GST REG-30.

Question(s) in Consideration:

• Whether cancellation of GST registration without adhering to Rule 25 of CGST Rules, 2017, particularly in respect of physical verification, is sustainable in law?

Observation of the Court:

1. Rule 25 mandates that physical verification of the business premises post-registration must be conducted in the presence of the person and uploaded with necessary documents in FORM GST REG-30 within 15 working days
2. The Court observed that no such notice for presence was issued to the petitioner, nor was the verification report uploaded on the portal as per Rule 25
3. Citing precedents (Micro Focus Software Solutions India Pvt. Ltd. and Curil Tradex Pvt. Ltd.), the Court held that non-compliance with procedural safeguards under Rule 25 vitiates the cancellation order

Judgment of the Court:

1. The Court quashed the cancellation order and restored the petitioner’s GST registration
2. It directed the department to allow eight weeks for the petitioner to file returns for the period during which registration remained cancelled

Between Fine Lines:

• The GST registration cannot be cancelled merely on the basis of address mismatch unless due process, especially under Rule 25, is followed.
• Proper notice, opportunity for presence, and timely uploading of the verification report are mandatory.
• Procedural lapse by the department invalidates the cancellation action.
• Written replies sent outside the portal still carry evidentiary value if proven.
• Relief includes both restoration of registration and grace period for return compliance.

Summary of Referred Cases

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