Proper Officer may Cancel GST Registration from Retrospective date u/s 29(2) of CGST Act: Delhi HC [Read Order]

In a recent decision, the Delhi High Court ruled that proper officer may cancel GST registration from retrospective date under Section 29(2) of the Central Goods and Service Tax Act, 2017 ( CGST Act ).

The Petitioner impugned the order dated 13.02.2021, whereby the GST registration of the petitioner has been cancelled retrospectively with effect from 15.07.2017 and also impugned the Show Cause Notice dated 03.02.2021. Vide Show Cause Notice, the petitioner was called upon to show cause as to why the registration be not cancelled on the ground that “Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months .”

Thereafter, the impugned order passed on the Show Cause Notice does not give reasons of cancellation. It, however, stated that the registration is liable to be cancelled for the following reason “whereas no reply notice to show cause has been submitted”.

The order stated “reference to your reply dated 12/02.2021 in response to the notice to show cause dated 03/02/2021” and the reason stated for cancellation is “Whereas no reply to notice to show cause has been submitted”. The order further states that effective date of cancellation of registration is 15.07.2017 i.e., a retrospective date.

The counsel for petitioner submitted that petitioner is no longer interested in continuing the business and has closed down his business activities due to ill health.

A Division Bench comprising Justices Ravinder Dudeja and Sanjeev Sachdeva held that “In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”

“In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 13.02.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 03.02.2021 i.e., the date when the Show Cause Notice was issued. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017” the Bench noted.

To Read the full text of the Order CLICK HERE

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