IMPORTANT POINT
Cancellation of GST registration with retrospective effect must be based on objective criteria and proper notice, and the proper officer must consider all relevant aspects before passing such orders.

JUDGMENT

Sanjeev Sachdeva, J. (Oral) - Petitioner impugns order dated 09.01.2023 whereby the GST registration of the petitioner has been cancelled. Petitioner also impugns the order dated 16.01.2024 whereby the application of the petitioner seeking revocation has also been dismissed.

2. Issue notice. Notice is accepted by learned counsel appearing for the respondents. With the consent of the parties, this petition is taken up for final disposal.

3. Petitioner carries on the business of manufacturing of safety critical products for automobiles and locomotives across India and was registered under the Central Goods and Services Act, 2017.

4. As per the respondents, a Show Cause Notice was issued to the petitioner on 27.12.2022 seeking to cancel GST registration of the petitioner. The ground mentioned in the Show Cause Notice is "others". As per the case of the petitioner, petitioner never received the Show Cause Notice and accordingly did not respond thereto.

5. Perusal of the Show Cause Notice shows that the Show Cause Notice requires the petitioner to appear before the undersigned i.e., the signatory of the notice. However, there is no name or designation of the officer mentioned who has issued the Show Cause Notice. The digital signatures on the Show Cause Notice also show "DS Goods and Services Tax Network 07".

6. Thereafter, the impugned order dated 09.01.2023 has been passed cancelling the registration of the petitioner. The order refers to a reply of the petitioner dated 05.01.2023. As per the case of the petitioner, petitioner never received the notice nor submitted any reply thereto. The order further cancels the registration on the ground that physical verification was conducted on 15.12.2022 and no such firm was found present at the registered office. The order further cancels the registration retrospectively w.e.f. 02.07.2017.

7. We note that the grounds for cancellation are different from the grounds in the Show Cause Notice. Petitioner was never intimated as to the real ground for cancellation. Cancellation order also suffers from infirmity in as much as the officer seems to have considered a reply of the petitioner when no such reply has been filed. Further, petitioner was never put to notice that the registration is liable to be cancelled retrospectively.

8. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, 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. The 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.

9. 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.

10. Petitioner thereafter filed an application seeking revocation. Pursuant to the application for seeking revocation, a Show Cause Notice dated 04.01.2024 was issued to the petitioner, seeking to rej