Case Title | BIJENDER THAKUR vs COMMISSIONER OF GST & ORS |
Court | Delhi High Court |
Honorable Judges | JUSTICE SANJEEV SACHDEVA JUSTICE RAVINDER DUDEJA |
Citation | 2024 (03) GSTPanacea 32 HC Delhi W.P.(C) 3381/2024 |
Judgment Date | 06-March-2024 |
The petitioner challenges an order dated 13.02.2021, which retrospectively cancels their GST registration from 15.07.2017. This cancellation is based on a Show Cause Notice dated 03.02.2021, where the petitioner was asked to explain why their registration should not be canceled due to non-filing of returns for six consecutive months. However, the impugned order fails to provide clear reasons for cancellation, merely citing the absence of a response to the notice as justification. This reasoning is contradictory as it mentions a reply dated 12/02/2021 to the notice but still claims no response was submitted. Furthermore, the retrospective nature of the cancellation is not adequately explained, and the petitioner was not notified of the possibility of retrospective cancellation in the Show Cause Notice, depriving them of the opportunity to object.
Subsequently, the petitioner sought revocation of the cancellation through an application dated 04.06.2021, citing reasons such as the closure of their business due to health reasons. However, this application was rejected on 23.05.2023, with the reason provided being the petitioner’s failure to respond to a notice issued on 18.08.2022 within the specified time frame.
The petitioner’s counsel argues that the petitioner has already ceased business operations due to health issues and is no longer interested in continuing the business. Thus, the cancellation of registration appears unjustified and the retrospective nature of the cancellation, along with the lack of proper reasoning and opportunity to object, further compounds the unfairness of the decision.
In the case discussed, it is observed that both the Show Cause Notice and the subsequent order lack sufficient details to justify their decisions. Specifically, there is a lack of explanation regarding the reasons for the retrospective cancellation of GST registration. According to Section 29(2) of the Act, the proper officer has the authority to cancel GST registration, including retrospectively, if certain conditions are met. However, it’s emphasized that such cancellations cannot be carried out mechanically and must be based on objective criteria rather than subjective judgment. Mere non-filing of returns for a certain period does not automatically warrant retrospective cancellation, especially if the taxpayer was compliant during the period in question.
The respondent in the case argues that one consequence of cancelling a taxpayer’s registration with retrospective effect is the denial of input tax credit to the taxpayer’s customers for the supplies made during that period. While this aspect is not directly examined in the context of the case, it is acknowledged that it is important to consider the potential impact on the taxpayer’s customers when making decisions regarding retrospective cancellation of GST registration. Thus, it is implied that any decision regarding such cancellations should take into account the broader implications on stakeholders beyond just the taxpayer.
The summary provides insight into a legal case concerning the cancellation of a taxpayer’s registration under the Goods and Services Tax (GST) Act. Both the petitioner and the department seek the cancellation of the GST registration, albeit for different reasons. The petitioner does not intend to continue business or maintain the registration.
The court modifies the impugned order to cancel the registration with effect from the date the Show Cause Notice was issued, which is 03.02.2021. The petitioner is directed to fulfill necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
Additionally, the respondents are not barred from taking steps for recovering any tax, penalty, or interest owed by the subject firm, even through retrospective cancellation of the GST registration.
The petition is disposed of according to the terms outlined above, providing clarity on the cancellation of the GST registration and potential actions for recovery of dues.
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