Delhi High Court quashes mechanical GST cancellation, restores registration of MS Imagine Marketing Limited
Background and context
MS Imagine Marketing Limited approached the Delhi High Court under Articles 226 and 227 of the Constitution to contest the cancellation of its GST registration. The controversy arose when the Superintendent, Range-56, passed an order on 26 November 2024 cancelling the assessee’s registration, primarily on the allegation that the business was “non-existent” at its principal place of business.
The assessee is the parent entity of the “boAt” audio and wearable brand and operates from premises located at H No. 19, Village Hauz Khas, New Delhi-110016. Since 2019, the assessee had been occupying these premises under successive lease deeds executed with the owners, namely, Shri Bhim Singh and Shri Satpal Singh. Initially, multiple floors of the building were taken on rent. However, due to a downsizing exercise in 2024, the assessee confined its operations to only the second floor under a fresh lease arrangement.
Despite being a regular filer of returns and having proper lease documentation in place, the assessee found its registration cancelled through a set of cryptic, template-based orders, which ultimately led to the present writ proceedings.
Initial Show Cause Notice for cancellation
Contents of the SCN dated 15 October 2024
On 15 October 2024, the Department issued a Show Cause Notice proposing cancellation of the GST registration. The material portion of this SCN stated:
“Show Cause Notice for Cancellation of Registration
Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:
- returns furnished by you under section 39 of the Central Goods and Services Tax Act,2017
Others
Non Existent
You are hereby directed to furnish a reply to the notice within thirty days from the date of service of this notice. If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits. Please note that your registration stands suspended with effect from”
The SCN is notable for its absence of concrete particulars. Other than the bare labels “Others” and “Non Existent” linked to Section 39 returns, it did not articulate:
- What specific discrepancies were noticed;
- On what basis the unit was claimed to be “non-existent”;
- Any reference to a particular inspection or verification report; or
- How the facts, if any, led to a conclusion that cancellation was warranted.
Still, the SCN granted a period of 30 days to respond.
Assessee’s prompt and detailed reply
The assessee did not wait for the full 30-day period. By 28 October 2024, it had already filed a detailed response (and, as recorded later in the order, the system shows reply vide AA071024036440T dated 07/11/2024). The reply enclosed, inter alia:
- Copies of the lease/rent agreements covering the Hauz Khas premises;
- GST returns for the latest three months; and
- Other supporting material to establish actual business operations at the declared principal place of business.
In short, the assessee addressed the concern of alleged non-existence and substantiated its continued presence at the authorised premises.
Non-speaking order cancelling GST registration
The cancellation order dated 26 November 2024
Despite the assessee having produced various documents, the Superintendent proceeded to cancel the registration by way of an order dated 26 November 2024. The order read as under in material part: