Full Judgment Text
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 19.03.2024
W.P.(C) 2416/2024
M/S VEETRAG TRADERS ..... Petitioner
versus
THE COMMISIIONER OF SGST DELHI
& ORS. …..Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Vibhas Kumar Jha, Mr. Rajat Pandey and
Ms. Manju Pandey, Advocates.
For the Respondents: Mr. Rajeev Aggarwal, ASC with Ms. Samridhi
Vats, Advocate.
CORAM:-
HON’BLE MR. JUSTICE SANJEEV SACHDEVA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner impugns order dated 20.03.2023 whereby the appeal
of the Petitioner seeking restoration of the GST registration has been
dismissed solely on the ground that the same is barred by limitation.
Petitioner also impugns order dated 13.08.2020 whereby the GST
registration of the petitioner was cancelled retrospectively with effect
from 01.07.2017 and also impugns Show Cause Notice dated
13.08.2020.
W.P. (C) 2416/2024 Page 1 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10
2. Vide Show Cause Notice dated 13.08.2020, petitioner was
called upon to show cause as to why the registration be not cancelled
for the following reason:-
“Any Taxpayer other than composition taxpayer has not filed
returns for a continuous period of six months”
3. Petitioner is a trading firm and is engaged in the business of
selling of craft paper and possessed GST registration.
4. Petitioner had submitted an application seeking cancellation of
GST registration dated 01.10.2019 on the ground of closure of
business.
5. Pursuant to the said application, notice was given to the
Petitioner on 11.04.2020 seeking additional information and
documents relating to application for cancellation of registration. On
account of unsatisfactory reply, order dated 16.06.2020 was passed
rejecting the application for cancellation merely stating “ Application
rejected in accordance with the provisions of the Act ”.
6. Thereafter, Show Cause Notice dated 18.02.2021 was issued to
the petitioner. Though the notice does not specify any cogent reason,
it merely states “ Any Taxpayer other than composition taxpayer has
not filed returns for a continuous period of six months” . Further, the
said Show Cause Notice also does not put the petitioner to notice that
the registration is liable to be cancelled retrospectively. Thus, the
W.P. (C) 2416/2024 Page 2 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10
petitioner had no opportunity to even object to the retrospective
cancellation of the registration.
7. Thereafter, the impugned order dated 29.11.2020 passed on the
Show Cause Notice also does not give any tenable reasons of
cancellation. It merely states that the registration is liable to be
cancelled for the following reason “ whereas no reply to notice to show
cause notice has been submitted”. However, the said order in itself is
contradictory. The order states “ reference to your reply dated
23/08/2020 in response to the notice to show cause dated 13/08/2020 ”
and the reason stated for the cancellation is “ whereas no reply to
notice to show cause has been submitted ”. The order further states
that effective date of cancellation of registration is 01.07.2017 i.e., a
retrospective date.
8. In our view, the order does not qualify as an order of
cancellation of registration. On one hand, it states that the registration
is liable to be cancelled and on the other, in the column at the bottom
there are no dues stated to be due against the petitioner and the table
shows nil demand.
9. Learned counsel for Petitioner submits that due to loss in
business, Petitioner had closed all business activities and asked his
consultant to surrender the said GST registration.
W.P. (C) 2416/2024 Page 3 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10
10. He further submits that the Petitioner received a notice seeking
additional information and documents relating to application for
cancellation of registration, however due to Covid-19 pandemic the
notice was missed by the Petitioner and his consultant.
11. He further submits that the Petitioner was unaware of the legal
proceedings as the consultant of the Petitioner expired due to Corona
virus and hence could not file a reply or his GST returns due to lack of
knowledge about GST procedure.
12. We notice that the Show Cause Notice and the impugned order
are also bereft of any details. Accordingly the same cannot be
sustained and neither the Show Cause Notice, nor the order spell out
the reasons for retrospective cancellation.
13. In terms of Section 29(2) of the Act, 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. 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
retrospective date also covering the period when the returns were
filed, and the taxpayer was compliant.
W.P. (C) 2416/2024 Page 4 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10
14. It is important to note that, according to the respondent, 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 tax
payer during such period. Although, we do not consider it apposite to
examine this aspect but assuming that the respondent’s contention in
required to consider this aspect while passing any order for
cancellation of GST registration with retrospective effect. Thus, a
taxpayer's registration can be cancelled with retrospective effect only
where such consequences are intended and are warranted.
15. It is clear that both the petitioner and the respondent want the
GST registration to be cancelled, though for different reasons.
16. In view of the fact that Petitioner does not seek to carry on
business or continue the registration, the impugned order dated
29.11.2020 is modified to the limited extent that registration shall now
be treated as cancelled with effect from 01.10.2019 i.e., the date when
Petitioner applied for cancellation of GST registration. Petitioner shall
make the necessary compliances as required by Section 29 of the
Central Goods and Services Tax Act, 2017.
17. It is clarified that Respondents are not precluded from taking
any steps for recovery of any tax, penalty or interest that may be due
W.P. (C) 2416/2024 Page 5 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10
in respect of the subject firm in accordance with law including
retrospective cancellation of the GST registration.
18. Petition is accordingly disposed of in the above terms.
SANJEEV SACHDEVA, J
RAVINDER DUDEJA, J
MARCH 19, 2024/ SK
W.P. (C) 2416/2024 Page 6 of 6
Signature Not Verified
Digitally Signed
By:VAISHALI PRUTHI
Signing Date:22.03.2024
11:08:10