In a recent decision, a division bench of the Delhi High Court observed that Proper Officer should reach objective satisfaction before cancelling GST Registration retrospectively.
The petitioner impugned the order whereby the GST registration of the petitioner was cancelled retrospectively with effect from 28.05.2022. Said cancellation order was issued pursuant to a Show Cause Notice dated 18.07.2023. The Show Cause Notice was issued to the Petitioner seeking to cancel its registration on the ground “Section 29(2)(e)- registration obtained by means of fraud, wilful misstatement or suppression of facts”.
The Show Cause Notice required the petitioner to appear before the undersigned i.e. authority issuing the notice on 25.07.2023 at 10:45AM. However, the Notice does not give the name of the officer or place where the petitioner has to appear. Further, the digital signatures in the show cause notice merely mention “digitally signed by DS GOODS AND SERVICES TAX NETWOK 07.”
The counsel for petitioner submitted that the petitioner submitted an application seeking condonation of delay in filing the application seeking revocation of cancellation of registration whereby the Petitioner stated that he was not well and his tax consultant did not inform him of filing the said returns, however, he was ready to file the returns and pay the tax liability including the payment of penalty.
The Court of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
“In view of the aforesaid, order dated 31.07.2023 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored. The petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017” the Bench added.
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