Effect of Cancellation of GST is from Date of Closure of Business: Delhi HC [Read Order]

In a recent decision, the Delhi High Court observed that the effect of cancellation of GST is from the date of the closure of the business.

It is the petitioner’s case that she was carrying on the business under the name of sole proprietorship concern ‘M/s P. S. Metal’ but she closed down her business activities on 11.11.2019 on account of ill-health. Therefore, the petitioner filed an application on the said date for cancellation of her GST registration. The same was duly acknowledged, but the petitioner’s application for cancellation of the registration was not processed.

Thereafter, the proper officer issued a show cause notice dated 12.01.2021 (‘the SCN’) proposing to cancel the petitioner’s GST registration on the ground that the petitioner had not filed the returns for a continuous period of six months. The petitioner was called upon to furnish a reply to the SCN within a period of seven working days from the date of service of the SCN.

Additionally, the petitioner was called upon to appear for a personal hearing on the appointed date and time, failing which she was cautioned that the case would be decided exparte.

It is material to note that the SCN did not specify the appointed date and time fixed for hearing the petitioner. Thereafter, the proper officer passed the impugned order cancelling the petitioner’s GST registration. The impugned order does not specify any reason for cancelling the petitioner’s GST registration, however, it mentions that no reply was received to the SCN.

A Division Bench of Justices Vibhu Bakhru and Amit Mahajan observed that “the impugned order is required to be set aside, however, we do not consider it apposite to do so since the petitioner’s prayer is limited. She prays that her GST registration be cancelled with effect from 11.11.2019 as the petitioner had stopped her business from the said date. In view of the above, we direct that the impugned order cancelling the petitioner’s GST registration would take effect from 11.11.2019 and not from 01.07.2017.”

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