GST Registration Cancellation with Retrospective Effect Invalid if Prior Cancellation Request Filed by Assessee: Delhi HC [Read Order]

The Delhi High Court ruled that Goods and Service Tax (GST) registration cancellation with retrospective effect is invalid if prior cancellation request is filed by assessee. 

Garg Candle Works,petitioner-assessee,had been registered under GST since 1st July, 2017. It applied for cancellation of registration on 15th May, 2023. The Department issued a notice on 14th June, 2023, asking for the profit and loss account as on the date of closure, filing of pending returns, and payment of tax dues related to Goods and Service Tax Returns (GSTR) mismatches. No reply was filed, as the petitioner claimed to be unaware of the notice.

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The application was rejected on 30th April, 2024, due to non-submission of required documents and unpaid tax dues.

Later, on 14th May, 2024, a fresh Show Cause Notice was issued for non-filing of returns for six months. The petitioner did not respond, and the registration was cancelled with retrospective effect from 1st July, 2017.

The impugned Show Cause Notice indicated that the registration was cancelled retrospectively due to non-filing of returns for six months. However, the petitioner had already applied for cancellation, and therefore, was not in a position to file returns for that period.

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The division bench comprising Justice Prathiba M.Singh and Justice Rajneesh Kumar Gupta found that cancelling the registration with retrospective effect due to non-filing of returns was not justified, as the petitioner had already applied for cancellation. It held that this was not a valid reason and set aside the retrospective cancellation.

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The petitioner’s counsel confirmed that there were no other pending notices under Sections 73 or 74 of the CGST Act.

Accordingly, the Court set aside the impugned order and directed that the GST registration would stand cancelled from 14th May, 2024. It also clarified that any other proceedings linked to the GSTIN would remain unaffected.

Therefore, the petition was disposed of.

To Read the full text of the Order CLICK HERE

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