In a recent ruling, the Delhi High Court restricted the retrospective cancellation of Goods and Services Tax (GST) registration due to lack of justification in the impugned order.
In this case, the writ petitioner, Star Enterprises, had registered his business with the GST authorities. The proper officer issued a Show Cause Notice (SCN) on 21.12.2021 in which the writ petitioner was called upon to show cause why its registration is not be canceled.
The SCN’s explanations make reference to the requirements for filing returns under Section 39 of the Central Goods and Services Tax Act as well as the details of outward supplies furnished by the petitioner in Form GSTR-1.
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The SCN does not make any claims that the aforementioned requirements were broken or that there was a disparity in the petitioner’s returns.
The petitioner was asked to file a reply to the SCN within 30 days and he was also directed to appear before the concerned proper officer on 23.12.2021. The petitioner’s GST registration was canceled by the impugned order.
The impugned order only states that the petitioner did not show up on the scheduled hearing date and that it is related to the SCN, without providing any explanation for canceling the petitioner’s GST registration.
The petitioner’s GST registration had been canceled retrospectively from 17.07.2021.
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The counsel appearing on behalf of the petitioner contended that the petitioner is not aggrieved by the cancellation of his GST registration as he has stopped his business.
The issue raised by the petitioner is that the proper officer had canceled his GST registration retrospectively.
The bench comprising of Justice Vibhu Bakhru and Justice Sachin Datta disposed of the petition and held that the cancellation order will take effect from the date of the SCN, which is 21.12.2021, not retrospectively, which is on 17.07.2021.
Thus, the Delhi HC directed cancellation of GST registration to be prospective as the impugned order does not reflect the reason for cancellation.
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