Failure to File Return Timely: Delhi HC modifies Retrospective Cancellation of GST Registration due to Lack of Reasoning [Read Order]

The Delhi High Court has modified the retrospective cancellation of GST registration on failure to file the returns timely, citing a lack of reasoning in the impugned order.

The petitioner, M/S Feron Life Sciences Pvt. Ltd., a company engaged in trading medicaments, centrifuges, and allied products, was registered under the Central Goods and Services Tax Act, 2017 (CGST Act).

The petitioner challenged the Show Cause Notice (SCN) dated 09.03.2021, and the subsequent order dated 28.12.2021, which retrospectively cancelled the company’s GST registration from 02.07.2017.

The petitioner primarily contested the retrospective cancellation of its GST registration. They did not challenge the cancellation itself but sought modification to ensure it was not applied retrospectively.

Vineet Bhatia, representing the petitioner, argued that the impugned SCN and the order were flawed because the SCN did not specify a date and time for a personal hearing, thus denying the petitioner a fair opportunity to present their case.

Moreover, the SCN did not propose cancelling the registration retrospectively but merely on account of the petitioner’s failure to file returns timely. The impugned order failed to provide any reasoning for the retrospective cancellation, only referencing the SCN.

The respondents, represented by Rajeev Aggarwal, acknowledged that the impugned order could be made operative from the date of the SCN, i.e., 09.03.2021, as the petitioner’s GST registration was suspended from that date.

The bench of Justices Vibhu Bakhru and Sachin Datta found several procedural lapses in the cancellation process, noting that the SCN lacked a specified date and time for a personal hearing, and no reasoning was provided in the impugned order for the retrospective cancellation.

“Since the learned counsel for the petitioner has not pressed the relief for setting aside the impugned SCN or the impugned order in their entirety, we consider it apposite to dispose of this petition by directing that the cancellation of the petitioner’s GST registration will be with effect from the date of the impugned SCN – 09.03.2021 – and not retrospectively with effect from 02.07.2017 as set out in the impugned order.” The court stated.

The petition was disposed of, modifying the effective date of cancellation to 09.03.2021, and ensuring compliance with the procedural requirements under the CGST Act. The order clarified that it would not preclude the respondent from initiating other steps for any failure on the part of the petitioner to comply with statutory provisions.

To Read the full text of the Order CLICK HERE

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