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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, Ravinder Dudeja, JJ.
M/s Supreme Enterprises - Appellant
Versus
Principal Commissioner of Goods And Service Tax North Delhi - Respondent
W.P.(C) 2971 of 2024
Decided On : 14-03-2024
GST Registration - Cancellation - Section 39 of the Central Goods and Services Tax Act, 2017 - 29(2) of the Act
Fact of the Case:
The petitioner seeks to challenge the retrospective cancellation of their GST registration and the show cause notices issued in this regard. The petitioner had applied for cancellation of registration on the ground of closure of business, but subsequent show cause notices and orders led to the retrospective cancellation of registration.
Finding of the Court:
The court found that the show cause notices and orders lacked specific reasons for retrospective cancellation and did not provide the petitioner with an opportunity to object to the retrospective cancellation. The court also emphasized that cancellation with retrospective effect should be based on objective criteria and warranted consequences.
Issues: The issues revolved around the validity of the retrospective cancellation of GST registration, the lack of specific reasons provided in the show cause notices and orders, and the compliance requirements under Section 29 of the Central Goods and Services Tax Act, 2017.
Ratio Decidendi: The court held that cancellation with retrospective effect should be based on objective criteria and warranted consequences. The court modified the impugned order to treat the registration as cancelled from the date of business closure and emphasized that the respondents were not precluded from taking steps for recovery of any tax, penalty, or interest due.
Final Decision: The petition was disposed of with the modification that the registration shall be treated as cancelled from the date of business closure, and the petitioner was directed to make necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
JUDGMENT
Sanjeev Sachdeva, J. (Oral) - Petitioner impugns order dated 07.07.2023, whereby the GST registration of the petitioner has been cancelled retrospectively with effect from 18.01.2022. Petitioner also impugns Show Cause Notice dated 06.06.2023.
2. Vide Show Cause Notice dated 06.06.2023, petitioner was called upon to show cause as to why the registration be not cancelled for the following reason:
"returns furnished by you under section 39 of the Central Goods and Services Tax Act,2017."
3. Petitioner is engaged in the business of polymers of ethylene and possessed GST registration.
4. Petitioner had submitted an application seeking cancellation of GST registration dated 26.07.2022 on the ground of closure of business.
5. Pursuant to the said application, notice was given to the Petitioner on 16.08.2022 seeking additional information and documents relating to application for cancellation of registration. On account of unsatisfactory reply, order dated 29.08.2022 was passed rejecting the application for cancellation.
6. Thereafter, Petitioner again submitted an application seeking cancellation of GST registration dated 24.11.2022. Pursuant to the said application, notice was issued to the Petitioner on 13.12.2022 seeking additional information and documents relating to application for cancellation of registration. Once again on account of unsatisfactory reply, order dated 18.01.2023 was passed rejecting the application for cancellation.
7. Further, Petitioner again submitted an application seeking cancellation of GST registration dated 30.01.2023. Pursuant to the said application, notice was again issued to the Petitioner on 31.01.2023 seeking additional information and documents relating to application for cancellation of registration. On account of unsatisfactory reply, order dated 13.02.2023 was passed rejecting the application for cancellation.
8. Thereafter, Show Cause Notice dated 06.03.2023 was issued to the petitioner. Though the notice does not specify any cogent reason, it merely states "Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax.". Said Show Cause Notice required the petitioner to appear on 16.03.2023 at 11:30 AM before the undersigned i.e. authority issuing the notice. However, the said Notice does not give the name of the officer or place where the petitioner has to appear. Further, the digital signatures in the Show Cause Notice merely mentions "digitally signed by DS GOODS AND SERVICES TAX NETWORK 07."
9. Further, the said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Thus, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
10. Thereafter, impugned order dated 20.03.2023, passed on the Show Cause Notice dated 06.03.2023, does not give any reasons for cancellation. It, however, states that the registration is liable to be cancelled for the following reason "1. You have neither appeared for the PH fixed nor submitted/uploaded any clarifications/reply for wrong availment and utilization of ITC credit. Your GST Registration is being Cancelled retrospectively to safeguard the Govt. Revenue as per CGST Act, 2017. If, you want to continue your Business, please discharge all pending GST Liability along with applicable interest and file an application for revocation of cancellation of GST Registration within a period of 30 days from the date of Cancellation on the common portal otherwise please discharge all pending GST liability along with applicable interest and file GSTR-10 within a period of 3 months from date of cancellation of Registration on the common portal. It is pertinent to `mention here that the cancellation of GST registration does not affect the liability of the person to pay tax and other dues for any pe
Cancellation of GST registration with retrospective effect must be based on objective criteria and intended consequences, and cannot be done mechanically.
Cancellation of GST registration with retrospective effect requires objective criteria and consideration of consequences, not solely based on the failure to file returns.
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 consider the consequences of retrospective cancellation.
GST registration cannot be cancelled with retrospective effect mechanically and must be based on objective criteria.
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....
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....
Objective criteria must be used for retrospective cancellation of GST registration, and consequences must be warranted for such cancellation.
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 ....
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.
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