The Delhi High Court in a bench comprising Hon’ble Mr. Justice Sanjeev Sachdeva and Hon’ble Mr. Justice Ravinder Dudeja allowed a petition, wherein the appeal filed by the petitioner was dismissed solely on the ground of limitation. The Court observed 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.The Petitioner was in the business of services involving repair, alterations, additions, etc. A show cause notice was issued to the petitioner on 07.04.2022. That vide the impugned Show Cause Notice dated 07.04.2022, the petitioner was called upon to show cause as to why the registration should not be cancelled. Though the notice does not specify any cogent reason, there was an observation in the notice stating failure to furnish returns for a continuous period of six months. The show cause notice requires the petitioner to appear before the undersigned i.e. authority issuing the notice. The notice did not give the name of the officer or the place or time where the petitioner had to appear. Further, the order dated 13.07.2022 passed on the show cause notice did not give any reasons for the cancellation of the registration.The Learned Counsel for the Petitioner submitted that the said order reflected that the GST of the Petitioner stands cancelled from 01.07.2017 even though returns thereafter have been filed by the Petitioner.The Court noted that neither the show cause notice nor the order spelt out the reasons for retrospective cancellation. In fact, in our view, an order dated 13.07.2022 does not qualify as an order of cancellation of registration.The Court observed that the show cause notice as well as the impugned order of cancellation, are themselves vitiated on account of lack of reason and clarity. The appeal has been dismissed solely on the grounds of limitation. Since the very foundation of the entire proceedings i.e. show cause notice and the order of cancellation are vitiated, no purpose would be served in relegating the petitioner to the stage of an appeal.The Court said that 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 Decision of the Court:
The Delhi High Court, allowing the petition, held that the impugned show cause notice dated 07.04.2022, the order of cancellation dated 13.07.2022, and the order in appeal dated 29.12.2023 are set aside.
TAGS: Delhi High Court GST registration cancellation retrospective date show cause notice order
