Mere non-filing of GST Returns for some Period does not mean GST Registration is required to be Cancelled with Retrospective Date: Delhi HC [Read Order]

In a recent decision, the Delhi High Court observed that mere non-filing of GST Returns for some period does not mean GST registration is required to be cancelled with retrospective date.

The application of the petitioner seeking cancellation was rejected on the ground “The party has not provided the requisite details as called for. Hence the request made by the party cannot be considered.” Thereafter, Show Cause Notice was issued to the petitioner on the ground that “returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017 along with an observation stating “Failure to furnish returns for a continuous period of six months”.

The counsel for the petitioner submitted that the order of cancellation of registration does not comply with the provisions of Rule 26(3) of the Central Goods and Services Tax Act, 2017, which mandates the method of authenticity of all notices, certificates and orders. He submitted that the admitted position, as borne out from the counter affidavit, is that the order was digitally signed by “DS Goods and Services Tax Network-IV”.

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.

 A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “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. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.”

“We do not consider it apposite to examine this aspect but assuming that the respondent’s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted” the Court noted.

To Read the full text of the Order CLICK HERE

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