In a recent ruling, the Delhi High Court by relying on the Central Board of Indirect Taxes and Customs ( CBIC ) Circular dated 26-10-2018, held that the cancellation of GST registration cannot be withheld due to pending liabilities.
In this case, the petitioner, M/S J.M.D. Traders, had approached the Principal Commissioner of Goods and Service Tax, North Delhi, requesting to issue directions to cancel their Goods and Services Tax ( GST ) registration, with effect from 12.08.2024, which is the date of the application.
Two days after the application was filed, the respondent issued a notice proposing to reject the petitioner’s application. The reasons include the petitioner’s failure to furnish reconciliation statements for GSTR-2A, 3B, and 1 M. The petitioner was also asked to provide a valid future address with supporting documentation and file pending returns for July 2024.
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Although the petitioner responded to the said notice, it was considered unsatisfactory. The petitioner later filed a fresh application for cancellation on 21.08.2024.
The Delhi High Court observed that cancellation of GST registration does not exempt the taxpayer from meeting their tax liabilities or compliance requirements and that it does not prevent the concerned authority from taking any action for any statutory violation or for recovery of dues.
The Delhi High Court bench was of the view that the application for cancellation of GST registration cannot be withheld for assessing the petitioner’s liability.
The Delhi High Court was of the view that the application for GST registration cancellation cannot be delayed to assess the liability of the petitioner. The bench reached this conclusion by referring to a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) dated 26-10-2018.
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The Delhi High Court Bench, comprising Justice Vibhu Bakhru and Justice Sachin Datta, directed the concerned authority to process the new application that was submitted by the petitioner for the cancellation of GST within four weeks and asked the petitioner to submit the required KYC documents and a valid address for future correspondence.
The petition was disposed of, along with the pending application.
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