“Not been Afforded the Sufficient Opportunity to Respond”: Delhi HC restores Retrospective GST Registration Cancellation Order [Read Order]

The Delhi High Court recently remanded the retrospective cancellation of GST registration of a petitioner in  a challenge to the cancellation of his GST registration with retrospective effect, asserting that he had not been given sufficient opportunity to respond before the cancellation was executed.

The sequence of events began when the petitioner applied for the cancellation of his GST registration, following the closure of his business. However, upon physical verification, the tax authorities deemed the business "non-existent" and moved forward with cancelling the registration retrospectively from the date of the original registration.

Get a Copy of GST Smart Guide, Click here

The petitioner filed an application on 02.11.2022 seeking cancellation of his GST registration. The copy of the said application has not been annexed with the present petition. The learned counsel appearing for the petitioner submits that since the petitioner’s access to the GST portal has been restricted, he is unable to access the same.  The counsel for the petitioner states that the petitioner had sought cancellation of his GST registration for the reason that it has closed his business.  

The bench noted that, “It is also material to note that the impugned SCN did not propose to

cancel the petitioner’s GST registration with retrospective effect. However, a letter dated 11.11.2022 sent by the Deputy Commissioner (Anti Evasion), CGST West Commissionerate to the Assistant Commissioner, Janakpuri Division, CGST West was projected on the GST portal. The said letter indicates that during the physical verification conducted at the premises of the petitioner’s principal place of business the firm was found non-existent. In terms of the said letter, the proper officer was directed to initiate the cancellation proceedings from the date of the registration.”

It was noted that, “ The petitioner is essentially aggrieved by the cancellation of GST registration with retrospective effect. We accept the petitioner’s contention that it has not been afforded the sufficient opportunity to respond to any proposed action for cancellation of his GST registration with retrospective effect.”

The court observed that while the authorities had issued a show-cause notice, the petitioner was not afforded adequate time or opportunity to contest the cancellation or prove his business's existence at the declared location until its closure.

Get a Copy of GST Smart Guide, Click here

It was also noted that the notice did not explicitly propose retrospective cancellation, yet the final order implemented it. This lack of proper procedure was a critical aspect of the court's consideration.

Ultimately, the Delhi High Court found the retrospective cancellation order to be in violation of natural justice principles, as the petitioner was not given a fair opportunity to present his case.

The Bench of Justices Vibhu Bakhru and Sachin Datta set aside the cancellation order and allowed the petitioner to submit a fresh response, directing the tax authorities to reconsider the case after providing a reasonable opportunity for the petitioner to be heard.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates