Notice to be served to the assessee before carrying out physical inspection of the business premises

[CA Bimal Jain]

The Hon’ble Delhi High Court in ADITYA NARAYAN OJHA (AMIT ASSOCIATES) VERSUS PRINCIPAL COMMISSIONER, CGST, DELHI NORTH & ANR.  - 2022 (8) TMI 689 - DELHI HIGH COURT has directed the Department to restore GST registration of the assessee within one week upon filing of pending returns along tax and other dues. Held that, notice is needed to be served to the assessee under Rule 25 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) before physical inspection is carried out.

Facts:

Aditya Narayan Ojha (“the Petitioner”) is the Proprietor of firm the M/s Amit Associates, who was served with a Show Cause Notice dated September 28, 2021 (“the SCN”) for cancellation of its GST Registration on the ground that it was obtained by means of fraud, wilful misstatement and suppression of facts. Due to no reply to the SCN within the prescribed time limit of one week, the GST Registration of the Petitioner was cancelled vide order dated October 10, 2021, passed by the Revenue Department (“the Respondent”).

Subsequently, an appeal was filed by the Petitioner wherein, the first Appellate Authority reversed the order passed by the Respondent vide the Order-in-Appeal (“OIA”) stating that there was no wilful default by the Petitioner.

Further, the Petitioner had also submitted an undertaking dated December 31, 2021 stating the Petitioner had already filed all its previous returns along with the tax amount and that will file pending returns along with the amount of tax along with interest within 15 days of restoration of GST Registration.

The Petitioner has filed the present writ petition against the non-compliance of the OIA with by the Respondent.

The Petitioner further stated that no notice of physical inspection was served. However, the non-existence of the Petitioner upon inspection by the Respondent was the prime basis of the cancellation of Registration of the Petitioner, which was not mentioned in the cancellation order.

Issue:

Whether the Respondent should comply with the OIA?

Held:

The Hon’ble High Court of Delhi in ADITYA NARAYAN OJHA (AMIT ASSOCIATES) VERSUS PRINCIPAL COMMISSIONER, CGST, DELHI NORTH & ANR.  - 2022 (8) TMI 689 - DELHI HIGH COURT held as under:

• Noted that, the Respondent did not comply with the requirement of serving notice before carrying out physical inspection as per Rule 25 of the CGST Rules.
• Observed that, there is no reference in the order passed by the Respondent to the fact that the Petitioner was not found to be in existence and therefore, the GST registration was cancelled. The only reason adverted to in the order is no response from the Petitioner w.r.t. the SCN.
• Stated that, the Respondent have no other alternative, but to comply with the order of the Appellate Authority, given the fact that they have taken no steps to approach the Court, despite liberty having been given.
• Held that, the Respondents must comply with the order of the Appellate Authority.
• Directed the Respondent to comply with the OIA and restore the GST Registration of the Petitioner within one week of filing of pending returns.

Relevant Provisions:

Rule 25 of the CGST Rules:

“Physical verification of business premises in certain cases. –

Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.”

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