“Very Easy To Blame A Professional”: Delhi High Court Rejects Plea To Restore GST Registration Blaming CA

The Delhi High Court has refused to restore a trader's cancelled GST registration, observing that it is “very easy to blame a professional” after the firm attributed its failure to respond to tax notices to its Chartered Accountant.

A Division Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul dismissed a batch of writ petitions filed by Fone Zone NXT, a proprietorship firm dealing in mobile phones and allied accessories. The firm had challenged the cancellation of its GST registration and ex parte assessment orders passed by the Delhi GST authorities.

The petitioner obtained GST registration on July 1, 2017. It claimed that the email address registered on the GST portal belonged to its CA and that show cause notices issued for multiple assessment years were not communicated to it. As a result, the firm did not reply to the notices or appear for personal hearings.

This led to ex parte orders being passed, including an order dated August 20, 2024, under Section 73 of the Delhi GST Act, by which a proposed demand of Rs 2.32 lakh was raised. Similar orders were passed for subsequent assessment years.

Before the High Court, the trader argued that it should not be penalised for the alleged lapse of its Chartered Accountant. It offered to deposit 50% of the outstanding demand as a condition for relief and relied on an earlier Division Bench ruling in Walsons Services Pvt. Ltd. v. Sales Tax Officer, where relief had been granted on a different factual footing.

The bench declined to accept the submission, noting that the facts of the present case were not identical to those in Walsons Services. The court recorded that the petitioner was aware that its GST registration was linked to the email address of the Chartered Accountant and that the suspension of the registration was also within its knowledge.

The court noted that no satisfactory explanation was offered as to whether any action had been initiated by the petitioner against the Chartered Accountant for the alleged lapse.

In this context, the court observed, “It is very easy to blame a professional, like the one in the present case, as such professional is not before this Court to defend his interest.”

The bench further held that the material on record did not establish any default on the part of the Chartered Accountant warranting interference. It also rejected the plea that willingness to deposit 50% of the liability justified deviation from the statutory procedure.

Holding that no case for indulgence was made out, the court dismissed all the petitions.