Retrospective cancellation of GST Registration cannot be made without satisfying Section 29(2)

Citation:

Sanchit Jain Vs. Avato Ward -46 State Goods & Services Tax

W.P.(C) No. 16211 of 2023 (High Court of Delhi)

[2023] 157 taxmann.com 570 (Delhi)

Brief Facts:

  1. Proper officer has issued Show Cause Notice dated 06.06.2023, proposing to Cancel GST registration for failure to furnish GST Returns for a continuous period of 6 months and the registration of petitioner was suspended w.e.f. from the date of the SCN.
  2. Order was issued cancelling the GST registration w.e.f. 03.07.2017, without mentioning any reason for doing so, other than that they had not filed returns for 6 months.
  3. It was observed by Hon’ble High Court that:
    • The said reason (Not filing returns for continuous period of 6 months) does not warrant cancelling of GST Registration even during the period the petitioner has filed the returns.
    • As per Section 29(2) of CGST Act, cancellation of GST registration (including from retrospective date) may be made only when the circumstances as specified in the sub-section are satisfied. Cancellation with retrospective effect cannot be arbitrary.
    • The petitioner does not object to the cancellation of registration, but they contend that the same cannot be done with retrospective effect, as the same had a cascading effect on their customers to whom supplies have been made, as they cannot avail ITC.

Order:

It was held by the Hon’ble High Court that:

  1. The impugned Order to the extent it directs the cancellation of GST registration with retrospective effect, is set aside.
  2. The GST Registration of the petitioner stands canceled from the date of SCN, i.e., 06.06.2023.