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GST Registration Cannot Be Suspended
for Long Without Completing Proceedings: Delhi High Court Tells CGST
Authorities to Finish SCN Proceedings in 3 Weeks, Calling Suspension Unfair
By Yogesh Verma (CS/ LLB) / 2 min. read / GST Case Law
Case Title: M/s Mindforce Research Private Limited
vs. Assistant Commissioner, CGST Delhi West
Case No.: W.P. (C)
14213/2024
Date of Order: 8th October 2024
Court: High Court of Delhi
Judges: Hon'ble Mr. Justice Yashwant Varma and
Hon'ble Mr. Justice Ravinder Dudeja
Facts of the Case:
M/s Mindforce Research Private Limited filed a writ petition
challenging the continued suspension of its GST registration. The company had
received a Show Cause Notice (SCN) dated 10th April 2023, alleging
discrepancies, which led to the suspension of its registration pending further
inquiry. The petitioner had responded to the SCN on multiple occasions,
specifically on 24th April 2023 and 22nd November 2023, explaining the issues
raised by the authorities. Despite the submission of these responses, the
respondent authorities failed to conclude the proceedings or dispose of the
matter.
The company further submitted a reminder to the authorities
on 31st May 2024, requesting a conclusion to the proceedings. However, the
respondent did not take any action, and the suspension of the petitioner’s
registration continued. As per the Central Goods and Services Tax Rules, 2017,
Rule 22 imposes a statutory obligation on the authorities to conclude the
proceedings within 30 days, but the respondents had not complied with this
timeline.
Submission by Petitioner:
1.
Delay in
Conclusion of Proceedings:
The petitioner’s counsel, Mr. Puneet Agrawal, argued that despite the
petitioner’s timely submission of responses on 24th April 2023 and 22nd
November 2023, the respondents had failed to conclude the proceedings as
required by Rule 22 of the CGST Rules, 2017. The counsel contended that the
suspension of registration was unjustified since the statute mandates a maximum
period of 30 days for concluding such proceedings. By continuing the suspension
beyond this period, the respondent had violated the statutory provisions.
2.
Right to
Business Continuity:
The petitioner emphasized that the ongoing suspension of its registration had
severely affected its business operations. The suspension prevented the company
from conducting its usual activities and caused financial distress. The
petitioner sought immediate disposal of the SCN and the restoration of its
registration.
Submission by Respondent:
1.
Non-Completion
of Inquiry:
The respondent’s counsel, Mr. Anurag Ojha, submitted that the proceedings had
not been concluded due to pending inquiries. The respondent argued that the SCN
was issued based on discrepancies found in the petitioner’s filings, which
required further investigation. However, the respondent did not provide
specific reasons for the delay in concluding the proceedings within the
statutory period.
Court's Findings and Judgment:
1.
Failure to
Conclude Proceedings within the Statutory Period:
The court found that the respondent had failed to comply with Rule 22 of the
CGST Rules, which imposes a clear obligation to conclude proceedings within 30
days. The petitioner had responded to the SCN as early as 24th April 2023, and
even after several months, no final order had been passed by the respondent. The
court held that the continued suspension of the petitioner’s registration
without a timely conclusion of the inquiry was unjustified.
2.
Direction
to Respondents:
The court directed the respondent authorities to examine the petitioner’s
replies submitted on 24th April 2023 and 22nd November 2023 and to dispose of
the SCN proceedings within three weeks from the date of the order. The court
emphasized that the statutory requirement under Rule 22 could not be
disregarded, and a delay in concluding the proceedings violated the
petitioner’s rights.
3.
Rights and
Contentions Reserved:
The court clarified that it was not passing any judgment on the merits of the
case and reserved the rights and contentions of both parties. The directive to
conclude the proceedings within three weeks did not preclude the respondent
from making a decision based on the facts presented in the petitioner’s
responses.
Conclusion:
The High Court of Delhi disposed of the writ petition,
holding that the continued suspension of the petitioner’s GST registration
without concluding the proceedings within the statutory period was unjustified.
The court directed the respondent to dispose of the SCN within three weeks,
ensuring compliance with Rule 22 of the CGST Rules. Both parties’ rights were
kept open for further adjudication based on the outcome of the SCN proceedings.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
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