SCN and Form GST REG 31 liable to be set aside when SCN lacks officer details issuing SCN and supporting documents and is not in compliance with Rule 21A of the CGST Rules

The Hon’ble Delhi High Court in the case of Rajkumar Singhal v. Goods and Services Tax Network [W.P. (C) NO. 3773 OF 2024 dated March 14, 2024] allowed the writ petition and set aside the Show Cause Notice (“SCN”) and Form GST REG 31 on the ground that the SCN lacks details of the officer issuing SCN and supporting documents and Rule 21A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) has not been complied with for issuance of Form GST REG 31.

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Facts:

Rajkumar Singhal (“the Petitioner”) filed the writ petition against the Show Cause Notice dated February 19, 2024 (“the Impugned SCN”) issued by the Revenue Department (“the Respondent”) on the ground that the name and designation of the concerned officer is not mentioned who has issued the SCN. Also, it was contended that there is a reference to certain supportive documents attached, however, there is no attachment to the SCN and there is no indication that the Petitioner would not be able to find the supportive documents. Further, it is stated that the SCN has not been signed by the proper officer but bears the digital signature.

Issue:

Held:

The Hon’ble Delhi High Court in the case of W.P. (C) No. 3773 of 2024 held as under:

  • Observed that, the SCN has been issued on the ground that registration has been obtained by means of fraud and willful misstatement or suppression.
  • Noted that, as per Rule 21A of the CGST Rules, requires that the person who is in contravention should be intimated in Form GST REG 31 electronically on the common portal or by sending the communication to the e-mail address provided at the time of registration.
  • Further Noted that, Form GST REG 31 has not been uploaded on the portal or sent electronically over e-mail to the Petitioner and has been sent through physical mail which is not prescribed form of service per Rule 21A of the CGST Rules.
  • Opined that, Form GST REG 31 issued by the Respondent would not substantiate the case registration cancellation as the said Form issued is not SCN for registration cancellation. The Registration cancellation was proposed in the Impugned SCN issued.
  • Held that, the Impugned SCN and Form GST REG 31 have been set aside.

Relevant Provision:

Rule 21A of the CGST Rules:

Rule 21A. Suspension of registration.-

(1) Where a registered person has applied for cancellation of registration under rule 20, the registration shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.

(2) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29 or under rule 21, he may suspend the registration of such person with effect from a date to be determined by him, pending the completion of the proceedings for cancellation of registration under rule 22.

(2A) Where,-

(a) a comparison of the returns furnished by a registered person under section 39 with the details of outward supplies furnished in FORM GSTR-1 or the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1, or such other analysis, as may be carried out on the recommendations of the Council, show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder, leading to cancellation of registration of the said person, or

(b) there is a contravention of the provisions of rule 10A by the registered person,

the registration of such person shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically, on the common portal, or by sending a communication to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said differences, anomalies or non-compliances and asking him to explain, within a period of thirty days, as to why his registration shall not be cancelled.

(3) A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2) or sub-rule (2A) shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

3A) A registered person, whose registration has been suspended under sub-rule (2) or sub-rule (2A), shall not be granted any refund under section 54, during the period of suspension of his registration.

Explanation.-For the purposes of this sub-rule, the expression “shall not make any taxable supply” shall mean that the registered person shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension.

(4) The suspension of registration under sub-rule (1) or sub-rule (2) or sub-rule (2A) shall be deemed to be revoked upon completion of the proceedings by the proper officer under rule 22 and such revocation shall be effective from the date on which the suspension had come into effect.

Provided that the suspension of registration under this rule may be revoked by the proper officer, anytime during the pendency of the proceedings for cancellation, if he deems fit.

Provided further that where the registration has been suspended under sub-rule (2A) for contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29 and the registration has not already been cancelled by the proper officer under rule 22, the suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns.

Provided also that where the registration has been suspended under sub-rule (2A) for contravention of provisions of rule 10A and the registration has not already been cancelled by the proper officer under rule 22, the suspension of registration shall be deemed to be revoked upon compliance with the provisions of rule 10A.

(5) Where any order having the effect of revocation of suspension of registration has been passed, the provisions of clause (a) of sub-section (3) of section 31 and section 40 in respect of the supplies made during the period of suspension and the procedure specified therein shall apply

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(Author can be reached at [email protected])

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CA Bimal Jain
A2Z Taxcorp LLP is a boutique Indirect Tax firm having its offices at New Delhi and Guwahati specializing in GST, Central Excise, Custom, Service Tax, VAT, DGFT, Foreign Trade Policy, SEZ, EOU, Export – Import Laws, Free Trade Policy, etc. It is a professionally managed firm having a team of experienced and distinguished Chartered Accountants, Company Secretary, Lawyers, Corporate Financial Advisors and Tax consultants to provide various services like litigation and representation, transaction advisory, diagnostic reviews/ health checks, audit defense & protection, retainership & compliance, configuration of tax efficient business model etc. Its clientele consists mainly of Foreign MNC, large/mid-sized Indian companies which includes exporters, FMCG, consumer durables, automobiles, aerated beverages, ceramic tiles, real-estate, hospitality, etc. Our clients include Varun Beverages Limited, Kajaria Ceramics Limited, L.G. Electronics India Private Limited, Shipra Hotel Limited, Multani Pharmaceuticals Limited, Shangri-La Eros Hotel etc. Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase–I, Delhi – 110091 India Desktel:+91-11-42427056 Mobile:+91 8076563802 [email protected] www.a2ztaxcorp.com
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