In a recent decision the Delhi High Court observed that mere non-payment of returns for some period not reason to cancel GST registration with retrospective date.
The petitioner impugned the order dated registration of the petitioner was cancelled from 01.07.2017 15.07.2021. The impugned order also sought to cancel the registration with effect from 01.07.2017. There was 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 Justice Sanjeev Sachdev and Justice Ravinder Dudeja observed that “Records clearly demonstrates that petitioner had submitted an application seeking cancellation of the GST registration on 06.05.2019 and thereafter, vide order dated 09.07.2022, the registration of the petitioner had been cancelled. Once the registration stood cancelled, there was no cause for the petitioner to file any returns. Accordingly, the cancellation of the registration on the ground that petitioner has failed to file returns is not sustainable. Further, we note that the cancellation of registration has been done with retrospective effect.”
“In view of the above facts and circumstances, the order of cancellation is modified to the extent that the same shall operate with effect from 06.05.2019, i.e., the date when petitioner first applied for cancellation of registration. It is clarified that respondents are not precluded from taking any steps for recovery of any tax, penalty or interest that may be due from the petitioner in accordance with law” the Court concluded.
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