The Delhi High Court directed to cancel Goods and Service Tax ( GST ) Registration of a closed firm retrospectively with effect from issuance of the Show Cause Notice ( SCN ) and not from the date of July 1st 2017.
The Petitioner impugned order dated 14.02.2023, whereby the GST registration of the petitioner has been cancelled retrospectively with effect from 02.07.2017. A Show Cause Notice ( SCN ) dated 26.08.2022 was issued to the Petitioner seeking to cancel its registration on the ground “During physical verification, the firm found to be non-existent”
The impugned order dated 14.02.2023 passed on the SCN stated that the registration is liable to be cancelled for the following reason. The taxpayer replied to the SCN that they had closed their business a year before. However, the matter came to light only after ASMT-10 returned undelivered and during Physical verification, the firm was found non-existent. Hence, canceled retrospectively.” The order further states that the effective date of cancellation of registration is 02.07.2017 i.e., a retrospective date.
The counsel for Petitioner Mr. Gaurav Gupta submitted that Petitioner regularly filed his returns till August 2022 and submitted a reply dated 29.08.2022 stating that “Sir our Delhi branch is closed for 1 Year. We are filing nil returns for the last 1 year. Kindly cancel my registration as soon as possible.” Thereafter, the petitioner against submitted a reply manually on 05.10.2023.
The bench noticed that the SCN and the impugned order are bereft of any details accordingly the same cannot be sustained and neither the SCN, nor the order spell out the reasons for retrospective cancellation.
Further, the said SCN also does not put the petitioner to notice that the registration was liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
The bench of Justice Sanjeev Sachdeva and Ravinder Dudeja concluded that an impugned order dated 14.02.2023 does not qualify as an order of cancellation of registration. On one hand, it was stated that the registration was 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. Accordingly, Petition was disposed of.
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