In a recent decision, the Delhi High Court observed that GST registration cannot be cancelled with retrospective effect mechanically.
The Petitioner impugned the order dated 04.11.2021, whereby the GST registration of the petitioner was cancelled retrospectively with effect from 10.07.2017 and also impugns Show Cause Notice dated 19.10.2021.
By the Show Cause Notice dated 19.10.2021, petitioner was called upon to show cause as to why the registration be not cancelled for the following reasons :-“non-compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed”.
Though the Show Cause Notice states that “non compliance of any specified provisions in the GST Act or the Rules made thereunder as may be prescribed”, however, it failed to mention which specific provisions have not been complied with.
The impugned order also sought to cancel the registration with retrospective effect from 10.07.2017. There is no material on record to show as to why the registration is sought to be cancelled retrospectively. Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
A Division Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
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