Central Goods and Services Tax Act, 2017, Section 29
Cancellation of registration--Cancellation
effected from retrospective date--Validity of
Conclusion: Cancellation
of GST registration with retrospective effect is contrary to provisions of
section 29(2) of the CGST Act, 2017.
GST registration of the assessee was cancelled with
retrospective date under section 29 of the Act. The assessee submitted that the
show cause notice and order of cancellation of registration did not put him to
notice that the registration was liable to be cancelled retrospectively.
Accordingly, he had no opportunity to even object to the retrospective
cancellation of the registration. Held: Show cause notice as well
as order cancelling registration were bereft of any details. However, the
assessee himself shut the business since June 2022 and was no longer interested
in restoration of the registration. Hence, the impugned order was modified to
the effect that the cancellation of registration would be effective from the
date of the show cause notice on which date the registration was also
suspended.
Decision: In favour
of assessee
IN THE DELHI HIGH COURT
SANJEEV SACHDEVA & RAVINDER DUDEJA
Himanshu Goyal v. Pr. Commr. of State GST
W.P.(C) No. 1199/2024
27 February, 2024
Petitioner by: Santanu
Kanungo & Himanshu Goel, Advocates.
Respondents by: Rajeev
Aggarwal, ASC.
Sanjeev Sachdeva, J.
Petitioner impugns order dated 12-10-2022, whereby, the GST
Registration of the Petitioner has been cancelled with effect from 8-6-2018
i.e. retrospective date.
2. Petitioner was in the
business of trading of household edible items and had obtained the GST
Registration.
3. As per the petitioner,
petitioner closed his business in June 2022. Subject Show Cause Notice dated
18-7-2022 was issued on the ground that the petitioner had not filed the
returns. Petitioner was called upon to file a reply and appear for personal
hearing on the appointed date and time.
4. Show Cause Notice shows
that there was no date, time or venue mentioned where the petitioner had to
appear pursuant to the Show Cause Notice. The Show Cause Notice does not even
bear the name and designation of the Officer issuing the Show Cause Notice and
merely bears the digital signature signed by D.S. Goods & Services Tax
Network (4).
5. The impugned order
cancelling the registration dated 12-10-2022 begins with a reference to a reply
dated 27-7-2022 and then states that no reply to notice to show cause has been
submitted and the effective date of cancellation is 8-6-2018. The notice thereafter
records that the petitioner has to pay the amounts mentioned in the notice on
or before 22-10-2022. However, the amounts mentioned are 0.0 i.e. Nil.
6. 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. 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
taxpayer 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. Further, Show Cause
Notice dated 18-7-2022 and order dated 12-10-2022 does not put the petitioner
to notice that the registration is liable to be cancelled retrospectively.
Accordingly, petitioner had no opportunity to even object to the retrospective
cancellation of the registration.
9. Clearly, the impugned
notice and impugned order are bereft of any detail and are thus not
sustainable. However, in the instant case, the case of the petitioner is that
petitioner has himself shut the business since June 2022 and is no longer
interested in the restoration of the GST registration.
10. Both the petitioner as
well as the respondent want cancellation of GST registration, however, for
different reasons. Accordingly, the impugned order dated 12-10-2022 is modified
to the effect that the cancellation of registration shall be effective from 18-7-2022
i.e. the date of the Show Cause Notice on which date the registration was also
suspended.
11. The petitioner shall
however comply with the provisions of section 29 of the Central Goods &
Service Tax Act, 2017 and file all necessary details as mandated by the Act.
12. It is clarified that
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 including retrospective cancellation.
13. Petition is disposed of.