The High Court of Delhi has remanded a case concerning the cancellation of the GST registration due to the non-filing of GST returns after an application for cancellation was submitted.
The writ petitioner, M/S Prime Accounting Solution, through its proprietor, Ms. Gurmeet Kaur, was represented by Mr. Vineet Bhatia, Ms. Aamnaya Jagannath Mishra, Mr. Keshav Garg and Mr. Bipin Punia sought the cancellation of their GST registration, asserting that their turnover for the financial year ending March 31, 2023, was below the taxable threshold.
The respondent revenue, Union of India and others, represented by Ms. Uma Prasuna and Mr. Gibran Naushad contended that the petitioner’s GST registration could not be cancelled due to non-filing of mandatory returns post-March 31, 2023. They issued notices for non-compliance and required additional information, asserting that the petitioner’s application for GSTIN cancellation did not exempt her from these obligations.
Despite the application for cancellation, the GST authorities issued a notice alleging that the petitioner had failed to file necessary returns and demanded a reply within 15 days.
The petitioner argued that they were unaware of this notice as it was posted on the GST portal, which they did not check, believing their GSTIN would be suspended following the application for cancellation.
The GST authorities requested additional information to support the cancellation application. This notice, too, escaped the petitioner’s attention due to similar reasons. The failure to respond led to the rejection of their cancellation application on April 22, 2024.
Further, on May 13, 2024, the GST authorities issued a Show Cause Notice (SCN) demanding an explanation as to why the GST registration should not be cancelled for failure to furnish returns over six months, under Section 39 of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner’s GSTIN was subsequently suspended and was summoned to appear before the proper officer on June 10, 2024.
The petitioner contended that the lack of response to SCN was due to their understanding that the application would suffice for suspension and eventual cancellation of the GSTIN.
The court noted that the action for cancellation was primarily due to the failure to file returns post March 31, 2023, a period during which they had already sought the cancellation of GSTIN.
In result, the division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta set aside the order passed by the respondent rejecting the application for cancellation of the GSTIN registration and directed the petitioner to appear before the concerned officer.
The GST proper officer is required to reassess the application for GSTIN cancellation, considering the earlier non-responsiveness. The petitioner is also instructed to submit all relevant documents as specified in the notice.
The court stressed the importance of procedural clarity and timely communication between taxpayers and authorities. It also highlighted the need for taxpayers to diligently monitor the GST portal for updates and notices to avoid complications.
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