In a recent case, the Delhi High Court, while directing the cancellation of Goods and Service Tax (GST) registration from 08.02.2021, observed that the revenue did not provide the petitioner with an opportunity to contest the cancellation with retrospective effect.
The writ petition was filed by Shyam Metals, and the Respondent/ revenue passed an order rejecting the petitioner’s GST cancellation application. Consequently, the petitioner’s GST registration was canceled retrospectively from 01.01.2019.
The order, issued in response to a show cause notice dated 29.09.2022, required the petitioner to respond within seven working days and appear before the appropriate authority on October 3, 2022. The petitioner’s GST registration was suspended from the date of the SCN, September 29, 2022.
During the appeal, the petitioner alleged not receiving a copy of the letter mentioned in the SCN, emphasizing that the cancellation request was submitted on 08.02.2021 due to business closure.
The court noted that the order lacked reasons for the retrospective cancellation from 01.01.2019, and the SCN did not specify the proposed retrospective cancellation date.
Consequently, the petitioner had no opportunity to contest the retrospective cancellation. Despite being open to prospective cancellation, the petitioner had no reason to contest the SCN.
After analyzing both parties’ facts and arguments, a division bench of Justice Vibhu Bakhru and Justice Anoop Kumar Mendiratta directed the effective date of cancellation to be 08.02.2021. The bench clarified that if the respondents seek retrospective cancellation before this date, a show cause notice must be issued, stating reasons and allowing the petitioner a fair opportunity to be heard.
Advocates Rajesh Mahana, Ramanand Rai, Mayank Kouts, and Shiva Narang appeared for the petitioner, while Arunima Dwivedi, Sr. Standing Counsel, with Ms. Pinky Pawar, Advocate, appeared for the respondent.
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