Case Details: North Steel India vs. Union of India (2026) 42 Centax 215 (P&H.)
Judiciary and Counsel Details
-
- Deepak Sibal & Ms Lapita Banerji, JJ.
- Shri Ish Puneet Singh, Adv., for the Petitioner.
- Shri Rishabh Kapoor, Ms Muskaan Gupta, Advs. & Saurabh Kapoor, Additional A.G. for the Respondent.
Facts of the Case
The petitioner challenged the show cause notice (SCN) issued in Form GST REG-17 under Rule 22 of the CGST Rules, which proposed the cancellation of GST registration with retrospective effect. The SCN alleged that the petitioner’s firm was found non-existent during physical verification conducted by the State authorities and that the registration had been obtained through fraud, willful misstatement, or suppression of facts. Furthermore, the SCN stated that, upon scrutiny of records available on the GST portal, major suppliers of the petitioner’s firm had their registrations cancelled retrospectively for passing fake Input Tax Credit (ITC). It also indicated that the petitioner’s firm was engaged in availing and passing fake ITC without the actual movement of goods. The record further revealed that, despite references to supporting documents within the SCN, no physical verification report, details regarding the cancellation of suppliers’ registrations, or material related to the alleged availing and passing of fake ITC were provided to the petitioner. The matter was subsequently placed before the High Court.
High Court Held
The High Court held that the SCN violated the principles of natural justice because the material underlying the allegations had not been supplied to the petitioner. The Court observed that the physical verification report was not furnished and that the SCN did not disclose any particulars regarding the retrospective cancellation of suppliers’ registrations or the alleged availment and passing of fake ITC without actual movement of goods. Further, although the SCN referred to supportive documents containing case-specific details, no such documents were appended to the notice served upon the petitioner. The High Court therefore held that the SCN did not serve the purpose contemplated under Rule 22 of the CGST Rules and was contrary to the spirit of the said provision. The High Court accordingly set aside the SCN with liberty to the department to proceed afresh in accordance with law and allowed the petition.
