The Delhi High Court ruled that if the Show Cause Notice (SCN) does not propose retrospective cancellation, the cancellation cannot be given effect retrospectively, and rather, the cancellation shall be effected from the date of the issuance of SCN.
Reference was made to the decision in the case of Akash Bansal (Proprietor M/S Shri Prem Ji Traders) V. Superintendent Range – 109 CGST Department, Delhi West, Division Rohini – W.P.(C) 13747/2025 DB, where it was observed that “In terms of Section 29(2) of the CGST 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. The 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 a retrospective date also covering the period when the returns were filed and the taxpayer was compliant”.
The Division Bench comprising Justice Pratibha M. Singh and Justice Shail Jain noted that the petitioner is not aggrieved by the cancellation of its GST registration as it had closed down its business. The petitioner is, essentially, aggrieved by the cancellation of its GST registration with retrospective effect.
The Bench also highlighted that 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 taxpayer during such period.
Briefly, in this case, the Petitioner, a partnership firm, after closure of its business in June 2021, was served with an SCN on February 02, 2022, 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, the order was passed, cancelling the GST registration w.e.f. 29th September 2018.
Cases Relied On:
Akash Bansal (Proprietor M/S Shri Prem Ji Traders) V. Superintendent Range – 109 CGST Department, Delhi West, Division Rohini – W.P.(C)13747/2025 DB
Appearances:
Advocates Siddharth Malhotra & Ritika Goel, for the Petitioner/ Taxpayer
Advocates Shlok Chandra, Anshuman Jindal, Urvi Mohan, and Vaishali Gupta, for the Respondent/ Revenue
