GST registration cancellation without issuing notice under Rule 25 and based on mere physical verification not sustainable.

Facts of the case:

• The Petitioner is a registered person who shifted his place of business and intimated the GST department about details of change in place of business in June 2018. However, reference number was not generated resulting in non-updation of place of business on the GST portal.
• A Show cause notice was issued requiring the Petitioner to appear before the concerned officer where the Petitioner submitted a reply referring application for change in place of business, however, such reply was not uploaded on the GST portal.
• The concerned officer cancelled the GST registration of the Petitioner on account of no business found on physical verification of the business premises on the address available with the GST authority.
• The petitioner filed a writ petition in the Delhi High Court seeking to quash the order of cancellation of GST registration.

Points Considered for Judgment:

• Adherence of Rule 25 of the CGST Rules which reads as, “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.”
• Rule 25 of the CGST Rules clearly mandates the GST authority to issue a notice to the Petitioner before conduct of physical verification of the premise of the assessee. The Rule also requires the authority to upload a verification report on the common portal within 15 days from the date of verification in Form GST REG-30. In the present case, the GST authority has neither issued a notice to the Petitioner for carrying out physical verification nor uploaded the verification report on the common portal.
• The same issue was dealt in the case of Micro focus software solution India Pvt Ltd Vs. UOI and in case of Curil Tradex Pvt Ltd Vs. The Commissioner, Delhi Goods and Service & Anr. The High Court held that facts of the case are fully covered by the precedents and hence, quashed the impugned order cancelling the registration and ordered to restore the Petitioner’s GST registration.

SW point of view:
Cancellation of GST registration violates the basic fundamental rights to earn and livelihood. This decision of the Hon’ble High Court will ensure that physical verification of the place of business is done in the presence of the assessee and an opportunity of being heard is given to the assessee before cancelling the GST registration.

Megha Dhankhar, Executive, Indirect Tax

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