IMPORTANT POINT
The main legal point established is that the retrospective cancellation of GST registration must be based on objective criteria and cannot be done mechanically. The proper officer must consider the consequences of retrospective cancellation, and the noticee should have the opportunity to object to such cancellation.

JUDGMENT

Sanjeev Sachdeva, J. (Oral)

1. Petitioner seeks quashing of show cause notice dated 12.11.2021 issued on the ground that "Retuns 3 B not filed GTO more than 5 crore" and impugns order dated 30.12.2021 cancelling the registration of the firm retrospectively with effect from 01.07.2017.

2. The subject petition has been filed by Mr. Mudit Bothra, legal heir of late Mr. Rajendra Kumar Bothra, who was the sole proprietor of M/s R. Trading Company and was registered under the Goods and Services Tax Act, 2017 (hereinafter referred to as the Act).

3. As per the Petitioner, Mr. Rajendra Kumar Bothra expired on 13.04.2021 and consequently, No GST returns were filed after April, 2021 on account of his passing away.

4. Since no reply was received to the show cause notice, the Assistant Commissioner passed the impugned order dated 30.12.2021, cancelling the registration retrospectively with effect from 01.07.2017.

5. Learned counsel for the Petitioner submits that the Petitioner does not intend to carry on business and the business has been discontinued immediately on the demise of Mr. Rajendra Kumar Bothra.

6. 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 sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer's registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.

7. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer's registration with retrospective effect is that the taxpayer's customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent's contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.

8. There is nothing on record to show that the deceased was not making the requisite compliances under the Act. As such the retrospective cancellation is not warranted

9. We may also note that the show cause notice did not put the noticee to notice that the registration was liable to be cancelled retrospectively. Accordingly, the Petitioner had no opportunity to even object to the retrospective cancellation of the registration.

10. In view of the fact that petitioner does not seek to continue the registration, the impugned order dated 30.12.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 13.04.2021 i.e., date of demise of late Mr. Rajendra Kumar Bothra. The Petitioners i.e., legal heir of the deceased proprietor shall file the requisite returns of any transactions of the business done and shall also place the details of stock left at the time of his death.

11. Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law.

12. Petition is accordingly disposed of in the above terms.