Revocation of GST Registration Cancellation Rejected without considering Reply of Assessee: Delhi HC Sets aside Retrospective Effect of Cancellation [Read Order]

The Delhi High Court set aside the retrospective effect of the Goods and Service Tax ( GST ) cancellation order and upheld the cancellation from the date of issuance of show cause notice. The Court found that the proper officer rejected the revocation application of GST Registration Cancellation without considering the reply of the assessee.

Singla Enterprises, the Petitioner challenged the order whereby the Goods and Service Tax ( GST ) registration of the Petitioner has been cancelled retrospectively with effect from 01.07.2017. Petitioner also impugns Show Cause Notice dated 18.02.2021.

The petitioner was called upon to show cause as to why the registration should be not cancelled for the following reason “Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.”

Petitioner is a proprietorship firm and is engaged in trading and retailing of paper board and woven fabric products and possesses GST registration. Though the notice does not specify any cogent reason, it merely states “Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax”. Further, the said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Thus, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.

The impugned order passed on the Show Cause Notice does not give reasons for cancellation. It, however, states that the registration is liable to be cancelled for the following reason “DEALER HAS MISMATCH IN THE YEAR 2018-19”. The order further states that the effective date of cancellation of registration is 01.07.2017 i.e., a retrospective date. 

A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja viewed that the order does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand.

 Petitioner filed an application seeking revocation of cancellation of registration. On the said application Petitioner was issued a Show Cause Notice for rejection of application for revocation of cancellation of registration dated 16.08.2022, whereby it was merely stated “Reason for revocation of cancellation - Others (Please specify) - This GSTIN is neither Aadhaar Authenticated nor e-KYC verified. PLEASE UPDATE ALL KYC NORMS.”

 Even after the petitioner filed a detailed reply, the proper officer failed to consider the same while passing the impugned order.  Since the Petitioner is now no longer interested in continuing the business and has closed down his business activities, the Court modified the impugned order to the limited extent that registration shall now be treated as cancelled with effect from 18.02.2021 i.e., the date when the Show Cause Notice was issued.

Mr. Rakesh Kumar, Mr. P.K. Gambhir and Mr. Akul Mangla appeared for the petitioner. Mr. Rajiv Aggarwal, Addl. Standing Counsel and Ms Samridhi Vats, Mr Anurag Ojha, Senior Standing Counsel with Mr Subham Kumar and Mr Vipul Kumar appeared for the respondent.

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