GST Registration Cancelled Retrospectively under CGST Act without showing the Cogent Reason: Delhi HC modifies Order [Read Order]

The Delhi High Court modified the order retrospectively cancelling the goods and service tax ( GST ) Registration without showing a cogent reason. It was found that the 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.

M/S Supreme Enterprises, the petitioner challenged the order whereby the GST registration of the petitioner has been cancelled retrospectively with effect from 18.01.2022. Petitioner also impugned a Show Cause Notice dated 06.06.2023.

 Petitioner is engaged in the business of polymers of ethylene and possesses GST registration. Petitioner had submitted an application seeking cancellation of GST registration dated 26.07.2022 on the grounds of closure of business. A notice was given to the Petitioner on 16.08.2022 seeking additional information and documents relating to the application for cancellation of registration. On account of an unsatisfactory reply, an order dated 29.08.2022 was passed rejecting the application for cancellation.  

Thereafter, Petitioner again submitted an application seeking cancellation of GST registration dated 24.11.2022. Under the said application, notice was issued to the Petitioner on 13.12.2022 seeking additional information and documents relating to the application for cancellation of registration.  Once again on account of an unsatisfactory reply, an order dated  18.01.2023 was passed rejecting the application for cancellation.

Petitioner again submitted an application seeking cancellation of GST registration dated 30.01.2023. Under the said application, notice was again issued to the Petitioner on 31.01.2023 seeking additional information and documents relating to the application for cancellation of registration.  On account of the unsatisfactory reply, the order was passed rejecting the application for cancellation.

Though the notice does not specify any cogent reason, it merely states “Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”. The said Show Cause Notice required the petitioner to appear on 16.03.2023 at 11:30 AM before the undersigned i.e. authority issuing the notice. However, the said Notice does not give the name of the officer or the place where the petitioner has to appear. Further, the digital signatures in the Show Cause Notice merely mention “digitally signed by DS GOODS AND SERVICES TAX NETWORK 07.”

It was found that the 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.

Justice Sanjeev Sachdeva And Justice Ravinder Dudeja viewed that the order does not qualify as an order of cancellation of registration. On one hand, it stated that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand.

 The court viewed that the Show Cause Notice and the impugned order are also bereft of any details accordingly the same cannot be sustained and neither the Show Cause Notice nor the order spell out the reasons for retrospective cancellation. 

 Since the Petitioner does not seek to carry on business or continue the registration, the impugned order is modified to the limited extent that registration shall now be treated as cancelled with effect from 26.07.2022 i.e., the date when the Petitioner closed down his business activities. The petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.

To Read the full text of the Order CLICK HERE

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