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2025 Supreme(Del) 389
IN THE HIGH COURT OF DELHI AT NEW DELHI
PRATHIBA M. SINGH, SHAIL JAIN, JJ.
M/s. Smart World Communications - Appellant
Versus
Commissioner of Central Tax and CGST Delhi - Respondent
W.P. (C) No. 13747 of 2025, C.M. APPL. Nos. 56395, 56396 of 2025
Decided On : 08-09-2025
Advocate Appeared:
For the Appellants : Siddharth Malhotra, Ritika Goel
For the Respondents: Shlok Chandra, Anshuman Jindal, Urvi Mohan, Vaishali Gupta
Retrospective cancellation of GST registration is impermissible if not proposed in the Show Cause Notice; effective cancellation must align with the issuance date of the SCN.
Headnote:(A) Constitution of India - Articles 226 and 227 - Cancellation of GST registration - Petitioner’s GST registration cancelled retrospectively from a date not proposed in Show Cause Notice (SCN) - Court rules retrospective cancellation unsustainable where SCN did not propose such action - Established legal precedent dictates that if SCN does not suggest retrospective effect, cancellation must reflect issuance date instead. (Paras 3, 8, 9)
(B) Legal Principles - Proper procedure for GST registration cancellation with retrospective effect mandates explicit reasoning within the order, ensuring objective criteria are applied - Retrospective effect cannot be invoked mechanically without warranted reasons stated in SCN or subsequent order. (Paras 9-10)
Facts of the case:
The Petitioner, a partnership firm, faced GST registration cancellation based on a SCN served for non-filing of returns, without mentioning a retrospective date. The firm had ceased business operations prior to the SCN.
Findings of Court:
The Court modified the cancellation order's effective date to the SCN date, ruling retrospective cancellation unconstitutional.
Issues: Key issues revolved around the validity of retrospective cancellation and whether due process was followed in notifying the Petitioner.
Ratio Decidendi: The court emphasized that without a proposal for retrospective cancellation in the SCN, such cancellation should not be effective.
Result: Petition allowed; cancellation of GST registration effective from 2nd February 2022.
JUDGMENT :
PRATHIBA M. SINGH, J.
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner under Articles 226 and 227 of the Constitution of India, inter alia, assailing the impugned order for cancellation of GST registration dated 17th March, 2022 (hereinafter ‘impugned order’) by which the Petitioner’s GST registration has been cancelled retrospectively w.e.f. 29th September, 2018.
3. The Petitioner is a partnership firm of three partners namely, Mr. Pankaj Kapur, Mr. Nikhil Jain and Mr. Hemant Arora. One of the partners, Mr. Hemant Arora has already passed away.
4. The Petitioner closed its business in June 2021. However, on 2nd February 2022, the Petitioner was served with a Show Cause Notice (hereinafter, ‘SCN’) for cancellation of the GST registration on the ground of non-filing of returns. In the said SCN, there was no ground set out that the proposed cancellation would be made retrospective. However, vide the impugned order dated 17th March 2022, the GST registration cancellation of the Petitioner was directed w.e.f. 29th September 2018.
5. The submission of ld. Counsel for the Petitioner is that the SCN did not propose retrospective cancellation and hence, the impugned order is unsustainable. Further, ld. Counsel for the Petitioner submits that since the business of the Petitioner is closed, the Petitioner does not wish to revive the GST registration. Accordingly, he prays that cancellation be directed from the date of issuance of the SCN i.e., 2nd February 2022.
6. Ld. Counsel for the Respondents submits that the petition is highly belated, considering that the impugned order was passed way back on 17th March 2022.
7. Considering the circumstances that one partner of the firm has passed away, the firm itself has been dissolved, and it is no longer doing business, the Court is inclined to entertain the writ petition, even at the belated stage.
8. It is now a settled position in law that if the SCN does not propose retrospective cancellation, the cancellation cannot be given effect retrospectively. This Court in the decision in Akash Bansal (Proprietor M/S Shri Prem Ji Traders) V. Superintendent Range - 109 Central Goods And Services Tax Department, Delhi West, Division Rohini, 2025:DHC:6866-DB held that in such cases, where the SCN does not propose retrospective cancellation, the cancellation shall be effected from the date of the issuance of SCN. The relevant portion of the said decision reads as under:
“7. The Court has heard the parties and perused the documents placed on records. The settled legal position is that if the SCN does not contemplate retrospective cancellation, the order cannot be passed directing retrospective cancellation. This position has been reiterated by this Court in various decisions including in Subhana Fashion v. Commissioner Delhi Goods and Service Tax , W.P. (C) No. 12255/2024, M/s Balaji Industries v. The Principal Commissioner CGST Delhi North Commissionerate & Anr. W.P. (C) No. 11913/2024 and Ridhi Sidhi Enterprises v. Commissioner of Goods & Service Tax (CGST), South Delhi & Anr. W.P. (C) No. 8061/2024.
8. The relevant portions of the decision in Subhana Fashion (supra) is as under:
“10. It is apparent to note that nonpayment of dues for a period of three months is not a prescribed ground for cancelling the petitioner’s GST registration.
11. It is also important to note that the impugned order sets out a tabular statement, which indicates that no amount has been determined as payable by the petitioner. The Central Tax, State Tax, Integrated Tax and Cess payable by the petitioner is reflected as, “0.0”.
12. Apart from the above, the impugned order has also been passed in violation of principles of natural justice. Although the SCN called upon the petitioner to appear for a personal hearing at the appointed date and time, no such date or time was indicated. Thus, in effect the petitioner was not afforded an opportunity to be heard.
13. In view o
