The Delhi High Court quashed the Retrospective Effect of Cancellation of Goods and Service Tax (GST) registration and directed to effect the cancellation only from the date of the closure of the premises of the assessee.
The petitioner, Krishna Traders challenged the order dated 02.03.2023 (hereafter ‘the impugned order’) whereby the petitioner’s GST registration was cancelled with the retrospective effect from 02.07.2017.
The petitioner was engaged in the business of trading rubber tyres, under a sole proprietorship concern named Krishna Traders. The petitioner is not aggrieved by the order cancelling the GST registration as it had applied for cancellation of the GST registration with effect from 31.03.2022. The petitioner is, essentially, aggrieved by the cancellation of the GST registration with retrospective effect.
It is the petitioner’s case that he had closed his business in Delhi with effect from 31.03.2022 and applied for cancellation of the GST registration on 13.04.2022. The petitioner had, after the closure of business, shifted from New Delhi to Dehradun.
A show cause notice was issued by the Proper Officer calling upon the petitioner to furnish additional information in connection with his application for cancellation of the GST registration. The petitioner claimed that he did not receive the said notice as he had shifted to Dehradun. Since the said show cause notice was not responded to and the petitioner did not provide the documents as sought, the Proper Officer rejected his application for cancellation of the GST registration by an order dated 29.05.2022.
The Proper Officer issued a fresh show cause notice proposing to cancel the petitioner’s registration because of failure to file tax returns for six months. Thereafter, the petitioner’s GST registration was cancelled by the impugned order with retrospective effect from 02.07.2017.
The petitioner stated that he had closed the business in Delhi with effect from 31.03.2022, the petitioner could not be expected to file any returns thereafter. Undisputedly, a taxpayer is entitled to close his business and seek cancellation of the GST registration.
A division bench comprising Justice Vibhu Bakhru and Justice Tushar Rao Gedela directed that the cancellation of the petitioner’s GST registration shall take effect from 31.03.2022. However, this would not preclude the concerned authorities from instituting any proceeding if it is found that the petitioner has violated any provisions of the Statute or is liable to pay any tax, interest or liability.
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