• Notification Date: 16-01-2024
  • Notification No: N/A

Delhi HC: Taxpayer cannot Object to Retrospective Cancellation of GST Registration

The Delhi High Court in the case M/S Een Sales Corporation Versus Assistant Commissioner of Central Goods and Services Tax (CGST) observed and has held that the taxpayers are not provided an opportunity to object to the retrospective cancellation of the GST registration. 

The bench comprising of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja in the case observed and has restored the GST registration of the petitioner to its original number in the matter. 

In the present case, the petitioner or assessee has challenged the show cause notice wherein it required the petitioner to show cause as to why the GST registration of the petitioner was not cancelled. 

The petitioner in the case was aggrieved by the order by which the GST registration of the petitioner has been cancelled with effect from 04.02.2023. 

The court stated that the show cause notice issued shows that the same does not contain any reason for the proposed cancellation and the reason which is mentioned is ‘non-compliance with any specified provisions in the GST Act or the Rules made thereunder as may be prescribed and there being no reason which is mentioned in the show cause notice. 

Therefore, the reason specified in the show cause notice is a mere extract of the provisions of the statute and there being no such details or even an averment as to what the non-compliance is or what provisions of the GST Act or the Rules are alleged to have been not complied with by the petitioner. 

The court stated that 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 wherein it includes any retrospective date, as he may deem fit if the circumstances set out in the said subsection are satisfied. Thus, the Registration cannot be cancelled with retrospective effect mechanically and the same 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. 

Further, the court stated that the taxpayer’s registration cannot be cancelled with a retrospective date which also covers the period when the returns were filed, and the taxpayer was compliant without any cogent reason. 

The department contended before the court that one of the consequences of cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit.