The Delhi High Court reiterated the settled legal position that if the show cause notice (SCN) does not contemplate retrospective cancellation of the GST, then the order for GST cancellation retrospectively would not be tenable. Accordingly, the Court restored the GST registration of the petitioner and set aside the cancellation order.
The Court directed that access to the GST portal shall be given to the petitioner, who shall then upload all the previous returns of its business on the portal along with the late payment and penalty, if any. The Court also granted liberty to the Respondent Department to conduct a fresh inspection and verify the existence of the petitioner.
Reference was made to the decision in the case of Riddhi Siddhi Enterprises vs. Commissioner of CGST, South Delhi [W.P.(C) 8061/2024], where it was held that the order under Section 29(2) of the CGST Act must itself reflect the reasons which may have weighed upon the respondents to cancel registration with retrospective effect, and the power to cancel retrospectively can neither be robotic nor routinely applied unless circumstances so warrant.
The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed from a perusal of the SCN dated November 11, 2021, that the same does not contemplate retrospective cancellation, which has been directed vide the cancellation order dated August 17, 2023.
Thus, the Bench reiterated that 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.
Briefly, the dispute pertained to the retrospective cancellation of the GST registration of the petitioner, in the garb of proceedings initiated under a Show Cause Notice, which was issued on the ground that the petitioner was found to be non-functioning/ non-existent at the principal place of business. The petitioner, therefore, had approached the High Court contending that since the cancellation was retrospective, the Input Tax Credits which have been availed of by the petitioner may be jeopardised.
Case Relied On:
Riddhi Siddhi Enterprises vs. Commissioner of CGST, South Delhi [W.P.(C) 8061/2024]
Appearances:
Advocate Sanjeev, for the Petitioner/ Taxpayer
Advocate Urvi Mohan, for the Respondent/ Revenue
