GST SCN did Not Specify Default Period or Dues: Delhi HC sets aside Retrospective Reg. Cancellation [Read Order]

In a recent ruling, the Delhi High Court set aside the retrospective Goods and Services Tax (GST) cancellation order when the show cause notice does not clearly mention the default period or the tax amount.

GLO Interio (the petitioner) applied for voluntary cancellation of registration under the GST Act after closure of business. A show cause notice was issued alleging non-payment of tax, interest or penalty. The notice did not mention the period of default, the amount due or that cancellation would be retrospective.

The petitioner did not file a reply to notice. The GST registration was cancelled with effect from 5 June 2019. The petitioner challenged this order before the Appellate Authority but appeal was dismissed as time barred without going into merits.

Before the High Court, the petitioner's counsel argued that the show cause notice was vague and did not give a proper chance to respond. The department's counsel argued that cancellation was valid since no reply was filed.

A Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul observed that even though the law allows retrospective cancellation, the show cause notice must clearly state the default period and dues. The court explained that a vague notice denies proper hearing and violates principles of natural justice.

The court set aside the retrospective cancellation order and the appellate order. The court allowed the department to issue a fresh show cause notice and directed the petitioner to reply within the given time. The court also imposed a cost of Rs. 10,000 on the petitioner for delay.

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