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 Good and Services Tax ( GST ) registration cannot be cancelled merely because a taxpayer has not filed returns for some period. The Petitioner discontinued the business on the demise of the father of the Petitioner. The retrospective cancellation of the registration resulted in the denial of the Input Tax Credit for the said period. 

Raghav Arora, the Petitioner challenged the order in an appeal whereby the appeal filed by the Petitioner has been dismissed solely on the ground of limitation. Petitioner filed the appeal impugning the order of cancellation of registration whereby the GST registration of the Petitioner was cancelled retrospectively with effect from Petitioner also impugns Show Cause Notice dated 14.08.2019.

Show Cause Notice issued on the petitioner to show cause as to why the registration be not cancelled for the reason that “As per the GSTI report, during the visit, the firm was found non-functioning on dated 13.08.2019”

The petition has been filed by Sh. Raghav Arora, legal heir of Late Sh. Gopal Kishan Arora, who was the proprietor of M/s Hari Gopal Steel and was engaged in the business of tubes, pipes and hollow profiles of cast iron. He was registered under the Goods and Service Act, 2017 (‘the Act’) and claimed to have been regularly filing GST returns and making GST payments under the law. 

The Petitioner’s father was diagnosed with Cerebral/Brain Atrophy and has been unwell since November 2018. He further submitted that his father did not visit the business premises regularly and did not make any sales after November 2018 due to his illness and expired on 09.03.2021. 

Respondent no. 1 passed the order retrospectively cancelling the GST registration of the taxpayer after a gap of more than 15 months. It was further submitted that no demand had been raised by the said order however the Registration was cancelled retrospectively w.e.f from 01.07.2017. 

The Petitioner does not intend to carry on business and the business has been discontinued immediately on the demise of the father of the Petitioner. He submitted that he is aggrieved by the retrospective cancellation of the registration as the Input Tax Credit is being denied for the said period. 

A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja noted that both the Petitioners and the department want cancellation of the GST registration of the Petitioner, though for a different reason. 

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 14.08.2019 i.e., the date when the Show Cause Notice was issued. 

It was clarified that Respondents are also not precluded from taking any steps to recover any tax, penalty or interest that may be due in respect of the subject firm under law. 

The petitioner was represented by Mr. Puneet Rai and none appeared for the Respondent.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates