GST Registration can be Cancelled Retrospectively only where Consequences are Intended and Warranted: Delhi HC [Read Order]

The Delhi High Court recently held that the GST Registration can be cancelled retrospectively only where consequences are intended and are warranted.

The Petitioner impugned the order dated 11.03.2024 whereby the GST registration of the petitioner was cancelled retrospectively with effect from 11.08.2023 and also impugns Show Cause Notice dated 14.02.2024.

By virtue of the Show Cause Notice dated 14.02.2024, the petitioner was called upon to show cause as to why the registration be not cancelled for the following reason:- “Non-compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed”.

Show Cause Notice dated 14.02.2024 was issued to the petitioner seeking to cancel its registration. Though the notice does not specify any cogent reason, it merely states “Non-compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed”. Said Show Cause Notice required the petitioner to appear on 21.02.2024 at 01:58 PM before the undersigned i.e., authority issuing the notice. However, the said Notice does not bear the name of the officer or place where the petitioner had to appear. It merely has digital signatures and mentions “digitally signed by DS GOODS AND SERVICES TAX NETWORK 07.”

A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.” “In view of the aforesaid, order dated 11.03.2024 and the show cause notice dated 14.02.2024 cannot be sustained and are accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017” the Court note

To Read the full text of the Order CLICK HERE

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