Cancellation of GST registration will be in effect from closing date of firm: Delhi HC [Read Order]

In a recent case, the Delhi High Court, while allowing the writ petition, held that the cancellation of Goods and Service Tax registration would be effective from the closing date of the petitioner’s firm. The writ petition was filed by the petitioner, R.K Metal Industries, challenging the order as the petitioner’s GST registration was canceled with retrospective effect. The order did not record any reason for canceling the petitioner's GST registration.

The proper officer had issued the Show Cause Notice (SCN) proposing to cancel the petitioner’s GST registration on the ground that the petitioner had not filed returns for a continuous period of six months. The petitioner responded to the SCN, stating that the firm was closed in September 2018 due to a sealing drive conducted by the East Delhi Municipal Corporation. The petitioner further stated that an attempt was made to surrender the petitioner’s GST registration, but the system was showing an error message.

The court observed that Section 29(2) of the Central Goods and Services Tax Act, 2017, empowers the proper officer to cancel the registration from any date, including with retrospective effect if the authority deems it fit. However, the discretion to cancel the registration with retrospective effect cannot be exercised arbitrarily.

In the present case, the only reason for proposing to cancel the petitioner’s GST registration was that the petitioner had not filed the returns for a continuous period of six months. However, the registration has also been canceled for a period during which the petitioner had filed the GST returns.

After analyzing the facts and arguments of both parties, a division bench of Justice Vibhu Bakru and Justice Amit Mahajan directed that the petitioner’s GST registration be canceled from September 2018 when the firm was closed. Dinesh Mohan Sinha appeared for the petitioner, and Rajeev Aggarval appeared for revenue.

To Read the full text of the Order CLICK HERE

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