Cancellation of GST Registration not be held on Account of assessment of tax: Delhi HC directs expeditious action [Read Order]

The Delhi High Court directed expeditious action on application for cancellation of the GST Registration and told not to hold the application on Account of assessment of tax, interest or penalty that may be recoverable from the petitioner.

The Petitioner, M/s B.R Enterprises is registered under the Central Goods and Services Tax Act (CGST) or Delhi Goods and Services Tax Act, 2017 (DGST 2017) and was assigned a GSTIN.

The petitioner represented by Mr. Pranay Jain & Mr. Karan Singh, Advocates claims that it was carrying on trading in polymers and propylene. After it ceased to carry on the said business, applied for the cancellation of its GST Registration by application dated 02.03.2023. The Proper Officer issued notice seeking additional information on 03.03.2023 and thereafter by an order dated 15.05.23 rejected the petitioner's application for cancellation of its registration.

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However, the Proper officer suspended the petitioner's GST Registration by order dated 11.06.2014 for failure on the part of the petitioner in filing its returns for a continuous period of six months.

Petitioner states that since the application of cancellation was rejected, the petitioner was compelled to file ‘Nil’ returns to comply with provisions. The petitioner once again applied for cancellation dated 18.07.2024. The Proper officer issued a notice dated 22.07.2024 raising certain queries including seeking documents confirming the address for future correspondence such as Rent Agreement, ownership proof, KYC documents etc.

The Proper Officer had also called upon the petitioner to furnish its returns and discharge the outstanding tax liability, if any. Additionally, the Proper Officer also sought reconciliation sheets for GSTR-1 & 3B and GSTR 2A & 3B year wise.

Since the petitioner claims that he has ceased from carrying on its business his application for the GST registration needs to be processed and cannot be withheld.

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Insofar the petitioner is required to provide the Rent Agreement, ownership proof, KYC documents etc. upon the request of Proper Officer. However, insofar further scrutiny of returns or proceedings for assessment of tax have not been initiated as yet.

Admittedly, the cancellation of GST registration does not preclude the Adjudicating Authority from initiating the appropriate proceedings for recovery of dues as well as for non-compliance of any statutory provisions. Thus the request of cancellation cannot be held upon that ground, the court said.

The Division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta directed that the petitioner's application for cancellation of its GST Registration cannot be held on account of assessment of tax, interest or penalty that may be recoverable from the petitioner.

Also the petitioner needs to provide the necessary documents for future correspondence within a period of one week from date. The Proper Officer shall consider the same and take the requisite steps for cancellation of petitioners GST registration as expeditiously as possible.

The Respondent, Principal Commissioner of Goods and Services Tax West Delhi was represented by Mr. Aakarsh Srivastava & Mr. Vaibhav Gupta, Advocates.

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