Retrospectively Canceled GST Registration: Delhi HC modified retrospectively canceled GST Registration to the date of SCN issued by GST department [Read Order]

In a recent case, the Delhi High Court modified the retrospectively canceled Goods and Service Tax ( GST ) registration to the date of Show Cause Notice ( SCN ) issued by the Goods and Service Tax Department.

The petitioner Chehak Fashions was engaged in the business of trading of woven fabric and possessed GST registration. through Its Proprietor Sh. Manish Golchha,  whereby the GST registration of the petitioner was canceled retrospectively with effect from 26.07.2017 and also impugns Show Cause Notice dated 20.09.2021. The cancellation order was passed on 26.10.2021. The department canceled the registration by issuing a SCN . As per the SCN the respondent mentioned that petitioner did not file return continuously for a period of 6 months .

During the adjudication it was observed that Show Cause Notice fails to mention the date and time for the Petitioner to appear for the personal hearing. Further, it also does not put the petitioner to notice that the registration is liable to be canceled retrospectively. Further the court observed that order dated 26.10.2021 does not qualify as an order of cancellation of registration.

Anurag Rajput,counsel for the petitioner submitted that the petitioner has closed business and is no longer interested in continuing business and has closed down his business activities since the lockdown.

It was observed by the court 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 subsection are satisfied. Registration cannot be canceled with retrospective effect mechanically.

Therefore the bench opinionated that Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be canceled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant

However both the petitioner and the respondent want the GST registration to be canceled, though for different reasons.

After analyzing the facts and arguments of both parties, a division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, held that the retrospectively canceled order dated 26.10.2021 is modified to the limited extent that registration shall now be treated as canceled with effect from 20.09.2021

To Read the full text of the Order CLICK HERE

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