A Division Bench of the Delhi High Court noted that, “the Petitioner does not seek to carry on business or continue the registration” and held that “the impugned order dated 18.08.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 23.04.2021 i.e., the date when petitioner filed an application seeking cancellation of GST registration.
The petitioner impugned the order dated 13.02.2024 whereby the appeal of the Petitioner has been dismissed solely on the ground that the same is barred by limitation. Petitioner also impugns order dated 18.08.2022 whereby the GST registration of the petitioner was cancelled retrospectively with effect from 01.07.2017 and also impugns Show Cause Notice dated 03.02.2022.
Petitioner is engaged in the business of manufacturing and retailing of iron wire, alloy steel wire, bundles, cables and possessed a GST Registration.
Petitioner had submitted an application dated 23.04.2021 seeking cancellation of GST Registration on the ground of discontinuance of business/ closure of business.
Pursuant to the said application, Notice dated 23.04.2021 was issued to the petitioner seeking additional information and documents relating to the application for cancellation of registration. However, the application seeking cancellation of registration was rejected vide order dated 05.07.2021. Though the said order does not give any specific reasons for rejection, it merely states “The reply has been examined and the same has not been found to be satisfactory for following reason(s).” Said order is entirely blank and does not give any particulars or details thereafter.
Pursuant to the said rejection of application seeking cancellation of GST registration, Petitioner submitted another application dated 20.07.2021 seeking cancellation of GST Registration on the ground of discontinuance of business/ closure of business.
Pursuant to the said application, Notice dated 11.08.2021 was issued to the petitioner seeking additional information and documents relating to the application for cancellation of registration. However, the application seeking cancellation of registration was rejected vide order dated 19.11.2021. Though the said order does not give any specific reasons for rejection, it merely states “The reply has been examined and the same has not been found to be satisfactory for following reason(s).” Said order is entirely blank and does not give any particulars or details thereafter.
Thereafter, impugned Show Cause Notice dated 03.02.2022 was issued to the Petitioner seeking to cancel its registration. Though the notice does not specify any cogent reason, it merely states “returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017” along with an observation stating, “failure to furnish returns for a continuous period of six months”.
Further, Said Show Cause Notice required the petitioner to appear on 04.03.2022 at 11:00 before the undersigned i.e., authority issuing the notice. However, the said Notice does not give the name of the officer or place where the petitioner had to appear. It merely mentions “Jurisdiction Officer” and the digital signatures in the Show Cause Notice merely mentions “digitally signed by DS GOODS AND SERVICES TAX NETWORK (4).”
It was further noted by the bench that, “Said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Thus, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.”
The bench of Justices Sanjeev Sachdeva and Tushar Rao Gedela noted that there was no material on record to show as to why the registration is sought to be cancelled retrospectively.
It was noted that in the impugned order of GST Registration cancellation, in the column of dues at the bottom there is “zero‟ amount stated to be due against the petitioner and the table shows nil demand.
It was also noted that the Show Cause Notice and the impugned order are also bereft of any details. It was thus held that the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation.
The bench also objectively reproduced the relevant provisions and remarked –
“In terms of Section 29(2) of the [ Goods and Services Tax ] 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 subsection are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
The Division Bench bench also observed that, “a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.”
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