Introduction:

In a recent ruling, the Delhi High Court addressed the cancellation of GST registration for M/S Aaira Batteries, highlighting violations of natural justice in the cancellation process. The case involved a dispute between M/S Aaira Batteries, the petitioner, and the Principal Commissioner of the Department of Trade Taxes, Government of NCT of Delhi, the respondent. The Court’s decision revolves around the restoration of GST registration due to procedural irregularities in the cancellation process.

Arguments of Both Sides:

The petitioner contested the cancellation of its GST registration, alleging that the cancellation order was bereft of specific details and failed to provide essential particulars. The show-cause notice lacked specific information about the alleged violations, such as the period, quantity, or nature of transactions, thereby inhibiting the petitioner’s ability to respond effectively. Moreover, while the notice mentioned wrongful availment of input tax credit (ITC) or refund of tax due to issued invoices without goods supply, it lacked precise figures or instances of such alleged violations.

On the other hand, the respondent justified the cancellation, citing the issuance of invoices without the supply of goods as the primary reason. However, the respondent’s arguments lacked specific instances or clear evidence to substantiate the alleged violations.

Court’s Judgment:

The Delhi High Court, presided over by Justice Vibhu Bakhru and Justice Amit Mahajan, found the cancellation order to be in contravention of the principles of natural justice. The Court emphasized that the show-cause notice failed to provide adequate particulars, denying the petitioner a fair chance to respond effectively. Additionally, the absence of a clear opportunity for a personal hearing further infringed upon the petitioner’s right to be heard. Consequently, the Court set aside the cancellation order, emphasizing the necessity of due process and proper adherence to natural justice principles in such regulatory actions.