In a significant case, the Delhi High Court set aside the cancellation of Goods and Service Tax (GST) registration due to non-filing of returns for six months as there is no need to file return when business cease to exist
The petitioner, Ashish Garg challenged the impugned order passed by the Adjudicating Authority, cancelling the petitioner’s GST registration with retrospective effect from 02.07.2017.
The petitioner had registered himself with the GST authorities with effect from 01.07.2021. It was claimed that some time in June, 2019, he decided to discontinue his business as he was suffering from various medical issues. Accordingly, on 20.07.2019, the petitioner filed the application for cancellation of his GST registration.
It was alleged that the respondent took no immediate steps to process the said application and the same remained pending for a considerable time. On 23.03.2020, the respondents issued a notice seeking additional documents for processing the petitioner’s application filed on 20.07.2019, for cancellation of his GST registration. Thereafter, the concerned officer passed an order rejecting the petitioner’s application for cancellation of his GST registration.
The petitioner stated that since almost two years had elapsed since he had closed his business, the information as sought was not readily available and he could not reply to the said notice within the time as provided. On 28.06.2021, the concerned authority passed an order rejecting the petitioner’s application for cancellation of his registration.
The respondent issued a Show Cause Notice calling upon the petitioner to show cause as to why his registration should not be cancelled on the ground that he had not filed returns for a continuous period of six months and registration was also suspended with effect from 30.06.2021.
There is no material on record to justify such retrospective cancellation of GST registration by the Adjudicating Authority. It was observed by the court that the retrospective cancellation cannot extend to include the period for which returns were filed by the petitioner.
It was evident that the petitioner ceased carrying business from June, 2019 and the petitioner cannot be asked to file returns for the period after he had closed down his business.
A Division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan directed the respondent department to process the petitioner’s application for cancellation of his registration with effect from 30.06.2019.
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