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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Tushar Rao Gedela, JJ.
Krishna Traders - Appellant
Versus
Commissioner of Central Goods And Service Tax Delhi North & Anr. - Respondents
W.P.(C) 12359 of 2023 & CM APPL. 48689 of 2023
Decided On : 20-09-2023
GST Registration - Cancellation with Retrospective Effect - The court directed the cancellation of the petitioner's GST registration to take effect from the date of closure of the business, emphasizing the entitlement of a taxpayer to close the business and seek cancellation of GST registration. The court also clarified that the cancellation with retrospective effect does not preclude authorities from instituting proceedings for any violations or liabilities.
Fact of the Case:
The petitioner's GST registration was cancelled with retrospective effect from a date prior to the closure of the business, despite the petitioner's application for cancellation with effect from the date of closure.
Finding of the Court:
The court directed the cancellation of the petitioner's GST registration to take effect from the date of closure of the business, emphasizing the entitlement of a taxpayer to close the business and seek cancellation of GST registration. The court also clarified that the cancellation with retrospective effect does not preclude authorities from instituting proceedings for any violations or liabilities.
Issues: Cancellation of GST registration with retrospective effect, failure to respond to show cause notice, entitlement of taxpayer to close business and seek cancellation of GST registration.
Ratio Decidendi: A taxpayer is entitled to close the business and seek cancellation of GST registration. Cancellation of GST registration with retrospective effect should be considered in light of the taxpayer's entitlement and does not preclude authorities from instituting proceedings for violations or liabilities.
Final Decision: The court directed the cancellation of the petitioner's GST registration to take effect from the date of closure of the business, while allowing authorities to institute proceedings for any violations or liabilities.
JUDGMENT
Vibhu Bakhru, J.
1. Issue notice.
2. The learned counsel for the respondents accepts notice.
3. The petitioner has filed the present petition impugning an order dated 02.03.2023 (hereafter `the impugned order') whereby the petitioner's GST registration was cancelled with the retrospective effect from 02.07.2017.
4. The petitioner, at the material time, was engaged in the business of trading of rubber tyres, under a sole proprietorship concern named Krishna Traders. It is material to note that the petitioner is not aggrieved by the order cancelling the GST registration as it had applied for cancellation of the GST registration with effect from 31.03.2022. The petitioner is, essentially, aggrieved by cancellation of the GST registration with retrospective effect.
5. It is the petitioner's case that he had closed his business in Delhi with effect from 31.03.2022 and had, accordingly, applied for cancellation of the GST registration on 13.04.2022. The petitioner had, after closure of business, shifted from New Delhi to Dehradun.
6. A show cause notice dated 26.04.2022 was issued by the Proper Officer calling upon the petitioner to furnish additional information in connection with his application for cancellation of the GST registration. The petitioner claims that he did not receive the said notice as he had shifted to Dehradun. Since the said show cause notice was not responded to and the petitioner did not provide the documents as sought for, the Proper Officer rejected his application for cancellation of the GST registration by an order dated 29.05.2022.
7. On 08.11.2022, the Proper Officer issued a fresh show cause notice proposing to cancel the petitioner's registration on account of failure to file tax returns for a continuous period of six months. Thereafter, the petitioner's GST registration was cancelled by the impugned order with retrospective effect from 02.07.2017.
8. The impugned order includes a tabular statement, which indicates that no tax was found due and payable by the petitioner.
9. Since it is the petitioner's case that he had closed the business in Delhi with effect from 31.03.2022, the petitioner could not be expected to file any returns thereafter. Undisputedly, a tax payer is entitled to close his business and seek cancellation of the GST registration.
10. As noticed above, the cancellation of the GST registration is not an issue, the issue relates to cancellation of the GST registration with retrospective effect.
11. In the given circumstances, we consider it apposite to direct that the cancellation of petitioner's GST registration shall take effect from 31.03.2022. However, this would not preclude the concerned authorities from instituting any proceeding if it is found that the petitioner has violated any provisions of the Statute or is liable to pay any tax, interest or liability.
12. The petition is disposed of in the aforesaid terms. The pending application is also disposed of.
A taxpayer is entitled to close the business and seek cancellation of GST registration, and cancellation with retrospective effect does not preclude authorities from instituting proceedings for viola....
GST registration cannot be cancelled with retrospective effect mechanically and must be based on objective criteria. The cancellation with retrospective effect should only be done if the consequences....
Cancellation of GST registration with retrospective effect should be based on objective criteria and consider the consequences of retrospective cancellation.
Cancellation of GST registration with retrospective effect must be based on objective criteria and intended consequences, not merely due to non-filing of returns.
Cancellation of GST registration with retrospective effect should be based on objective criteria and warranted consequences, and the respondents are not precluded from taking steps for recovery of an....
Cancellation of GST registration with retrospective effect requires objective criteria and consideration of consequences, and must be in accordance with the law and after providing an opportunity of ....
GST registration cannot be cancelled with retrospective effect mechanically and must be based on objective criteria. Cancellation with retrospective effect should only occur when intended consequence....
GST registration cannot be cancelled with retrospective effect mechanically and must be based on objective criteria.
Cancellation of GST registration with retrospective effect must be based on material on record and rationale, and the taxable person must be put to notice of the proposed action.
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