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February 12, 2022

Delhi HC: Registration under GST cannot be suspended for more than 2 months on the basis of SCN lacking any reason

by Mahesh Mara in GST, Legal Court Judgement

Delhi HC: Registration under GST cannot be suspended for more than 2 months on the basis of SCN lacking any reason

Fact and Issue of the case

Shakti Shiva Magnets Private Limited has filed this petition against the SCN issued dated November 11, 2021 by Revenue Department due to which the Petitioner’s registration was suspended for more than 2 months with no sufficient explanation or reason or fact. The Petitioner contended that as per Rule 21A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) that describes the conditions needed to be fulfilled for suspending a registration and Rule 22(3) of the CGST Rules wherein it is provided that an assessee’s registration can be suspended only for 30 days and the cancellation proceeding has to be concluded within the same period. Further, the Respondent prayed for 3 days’ time to issue a fresh detailed SCN to the Petitioner and for fifteen days’ time to decide the same.

Observation of the court

Since in the present case, petitioner’s registration has been lying suspended for more than two months on the basis of a show cause notice which is bereft of any reason or fact, this Court quashes the impugned show cause notice dated 11th November, 2021 and directs the respondents to restore the petitioner’s registration forthwith. However, the respondents are permitted to issue a fresh show-cause notice mentioning all the relevant facts and reasons within a week. The same shall be responded to by the petitioner within a period of seven working days from the date of the service of such notice (Rule 22, DGST). The respondents shall thereafter decide the same in accordance with law within two weeks.

The Commissioner, Delhi, GST, is also directed to issue a practice direction so that in future, if any show-cause notice for cancellation of GST registration is issued, the same is not bereft of any material particulars or reasons.


The Court disposed off the appeal and ruled in favour of the taxpayer

Read the full order from below


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