Order of Cancellation of GST Registration is to Take Effect from Date on which Business was Last Carried: Delhi HC [Read Order]

The Delhi High Court observed that the order of cancellation of GST Registration is to take effect from date on which business was last carried.

The Petitioner was in the business of purchase and sale of Surgical Goods and Trading goods and was registered under the Goods and Services Tax Act, 2017. Petitioner claims to have stopped the business on 28.01.2019 and submitted an application on 03.08.2022 seeking cancellation of registration. Pursuant to the said application, notice was given to the Petitioner on 04.08.2022, seeking additional information and documents relating to application for cancellation of registration.

As per the Petitioner, she could not submit the required information as she did not have regular business and could not look up the portal. Pursuant, to non-supply of the said documents order dated 16.08.2022 was passed rejecting the application for cancellation filed by the Petitioner.

Further, the show cause notice issued to the petitioner on 23.09.2022 does not specify any cogent reason, there is an observation in the notice stating "failure to furnish returns for a continuous period of six months".

Further, the impugned order dated 07.10.2022 stated that the registration is liable to be cancelled for the following reason "no response received from the taxpayer". It sought to cancel the registration with effect from 02.07.2017. There is no material on record to show as to why the registration is sought to be cancelled retrospectively.

A Division Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “Records clearly demonstrates that petitioner had submitted an application seeking cancellation of the GST registration on 03.08.2022 and thereafter, vide order dated 07.10.2022, the registration of the petitioner had been cancelled. 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 effected from 28.01.2019, i.e., the date on which the petitioner is alleged to have last carried on business. 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.”

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