Retrospective GST Cancellation Cannot Be Passed Unless Specifically Mentioned in SCN With Reasons: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that retrospective cancellation of GST registration cannot be passed unless it is specifically mentioned in the show cause notice (SCN) with reasons.

EWorld Business Solutions Private Limited, the petitioner, filed a writ petition challenging the cancellation of its GST registration by an order dated 18 March 2025, which cancelled its registration retrospectively from 1 July 2017.

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The petitioner had received a show cause notice on 31 December 2024 for non-filing of returns. Soon after, on 15 January 2025, the petitioner filed all pending returns and paid the dues along with interest and late fees. The petitioner’s counsel argued that under Rule 22(4) of the CGST Rules, once returns and dues are cleared, the proceedings must be dropped.

The cancellation order was issued retrospectively and also relied on a new ground that the petitioner was not found at its business premises during physical verification, although this was never mentioned in the SCN.

The department’s counsel confirmed that the petitioner had filed the returns and made the payments but argued that cancellation was justified because the premises were not found operational at the given address.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the cancellation order went beyond the reasons stated in the SCN. The court explained that retrospective cancellation of GST registration carries serious consequences such as affecting the input tax credit of buyers and cannot be applied mechanically.

The court pointed out that since the SCN did not propose retrospective cancellation or raise the issue of non-existent premises, the impugned order was unsustainable. The court set aside the cancellation order dated 18 March 2025 and directed that the petitioner’s GST registration shall be treated as cancelled only from 31 December 2024, the date of the SCN.

The alert notice issued on 27 May 2025 was also quashed. The department was given liberty to initiate fresh proceedings if there are any other violations under the law. The writ petition was allowed.

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