In a significant case, the Delhi High Court while observing the cancellation of GST registration of V-Belt trading modified the retrospectively cancelled the GST registration.
The petitioner Shibendra Narayan Guha was engaged in the business of trading of V-Belt (Motor Parts) and possessed GST registration. The petitioner’s GST registration has been cancelled retrospectively with effect from 01.07.2017 due to failure to furnish returns for a continuous period of six months”.
Aggrieved by the order the petitioner filed writ petition before the court.
During the proceedings,counsel for the petitioner argued that petitioner is no longer interested in continuing the business and has closed down his business activities because of his ill health & old age. Further, neither the show cause notice, nor the order spell out the reasons for retrospective cancellation.
According to the Counsel for respondent one of the consequences for cancelling a tax payer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period.
It was observed by the court that In terms of Section 29(2) of the Act, 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.
Hence Registration cannot be cancelled with retrospective effect mechanically. Therefore Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant
Furthermore the division bench observed that both the Petitioners and the department want cancellation of the GST registration of the Petitioner, though for a different reason. The Petitioner does not seek to carry on business or continue the registration
Therefore the division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, held that the cancelation order dated 11.11.2022 is modified to the limited extent that registration shall now be treated as canceled with effect from 07.10.2022.
Mr. Prince Mohan Sinha, Mr. Dinesh Mohan Sinha and Mr. Maneesh Jain, advocates Who appeared for the petitioner.
Rajeev Aggarwal,, Advocate who appeared for the revenue.
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