GST Registration cannot be Cancelled merely Because a taxpayer has not filed returns for some Period: Delhi HC [Read Order]

The Delhi High Court has held that GST registration cannot be cancelled merely because a taxpayer has not filed returns for some period. The court modified the impugned order to the limited extent that registration shall now be treated as cancelled with effect from 17.10.2020 i.e., the date when the petitioner filed an application seeking cancellation of GST registration.

The petitioner represented Mr M.A. Ansari, Mr Khursheed Ahmad, Mr Mohd Kamil and Mr Mohd Ikram. The respondent was represented by Mr. Rajiv Aggarwal, ASC with Ms. Samridhi Vats.                     

Hansraj Tiles World, the Petitioner challenged the order whereby the appeal of the Petitioner has been dismissed solely on the ground that the same is barred by limitation. Petitioner also challenged the order whereby the GST registration of the petitioner was cancelled retrospectively with effect from 01.07.2017 and also impugns Show Cause Notice dated 11.03.2021.

 The petitioner is engaged in the business of trading sanitary goods and possessed GST Registration. Petitioner had submitted an application seeking cancellation of GST Registration dated 17.10.2020 on the grounds of closure of business due to the lockdown and the ill health of the proprietor.  A notice was issued to the petitioner seeking additional information and documents relating to application for cancellation of registration. The application seeking cancellation of registration was rejected vide order dated 02.03.2021. 

Thereafter, an impugned Show Cause Notice was issued to the Petitioner seeking to cancel its registration. Though the notice does not specify any cogent reason, it merely states “Any taxpayer other than composition taxpayer has not filed returns for a continuous period of six months.”  The said 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.

The Court noted that on one hand, it states 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 petitioner submitted that the petitioner is no longer interested in continuing business and has closed down his business activities due to the lockdown and ill health of the proprietor.

A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja found that 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 court modified the impugned order to the limited extent that registration shall now be treated as cancelled with effect from 17.10.2020 i.e., the date when the petitioner filed an application seeking cancellation of GST registration.

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