Case Reference
M/s Euro PVC Fabric v. Principal Commissioner of Goods and Services Tax, South Delhi
Court: Delhi High Court
Petition: W.P.(C)
Category of Dispute: GST Registration – Cancellation & Restoration
Date of Judgment: 27 February 2024
Relevant Provisions:
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Section 29, Central Goods and Services Tax Act, 2017
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Rule 22 and Rule 23, Central Goods and Services Tax Rules, 2017
Facts
The petitioner, M/s Euro PVC Fabric, was subjected to cancellation of GST registration vide order dated 18.01.2021 with retrospective effect from 31.12.2020. The cancellation stemmed from a show cause notice dated 29.04.2020 alleging non-filing of returns for a continuous period of six months. The notice required submission of a reply and appearance for personal hearing, failing which an ex parte decision was contemplated. However, the show cause notice conspicuously omitted the date, time, and venue for such hearing, thereby depriving the petitioner of an effective opportunity to be heard (paras 1–3).
Questions / Issues for Consideration
Whether a GST registration cancellation order is legally sustainable when:
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The show cause notice does not specify the date, time, or venue for personal hearing;
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The cancellation order refers to a reply which was admittedly never filed; and
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The order contains no discernible reasons and is evidently system-generated, reflecting non-application of mind by the proper officer (paras 3–7).
Observations
The Court undertook a close scrutiny of the impugned order and found glaring procedural and substantive infirmities. It noted that while the cancellation order claimed consideration of a reply dated 09.05.2020, it was an admitted position that no reply had ever been filed by the petitioner. Further, the order merely contained the numerical entry “1.” under reasons, without any accompanying rationale, and even reflected a nil tax liability. Such contradictions, according to the Court, unmistakably demonstrated non-application of mind by the Superintendent who passed the order (paras 5–7).
The respondents’ defence that the order was system-generated did not find favour with the Court. On the contrary, the Court held that a mechanically generated order, without independent scrutiny by the proper officer, aggravated the illegality rather than curing it. The Court also rejected the objection regarding delay and availability of alternative remedy, holding that in cases of patent illegality and mechanical exercise of power, relegating the assessee to revocation proceedings would serve no meaningful purpose (paras 8–11).
Judgment
The Delhi High Court set aside the GST registration cancellation order dated 18.01.2021, holding it to be legally unsustainable due to complete non-application of mind and violation of principles of natural justice. The petitioner’s GST registration was restored forthwith, subject to compliance with statutory requirements, including filing of pending returns and payment of applicable late fees in terms of Rule 23 of the CGST Rules, 2017. The writ petition was accordingly allowed (paras 9–12).
Cases Referred – Summary Table
| Case | Court | Core Issue | Verdict |
|---|---|---|---|
| M/s Euro PVC Fabric v. PCGST, South Delhi | Delhi High Court | Mechanical GST registration cancellation without reasons | Cancellation quashed; registration restored |
Between Fine Lines – Trade & Industry Takeaway
This judgment reinforces that GST registration cannot be cancelled through automated or template-based orders devoid of reasoning. Tax authorities must independently apply mind, issue proper hearing details, and pass reasoned orders. For trade and small taxpayers, the ruling offers strong judicial protection against arbitrary system-driven cancellations, especially where compliance lapses are curable and no tax liability is determined.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
