Retrospective cancellation of GST cannot be made for Non-filing of returns for 6 months.

Citation:

Raj Enterprise Vs. Superintendent, Range 25 GST Division

W.P.(C) No. 15777 of 2023 – High Court of Delhi

[2024] 158 taxmann.com 143 (Delhi)

Petitioner stopped carrying on the business and made an application for cancellation of registration on 19-10-2021. Upon certain queries remaining unanswered, the application was rejected on 30-11-2021.
On 1-12-2021, another application was made requesting cancellation w.e.f. 15-11-2021.
Petitioner also claimed that it has filed returns till 31-12-2021.
The application was again rejected and SCN dated 10-8-2022 was issued proposing the cancel the registration for failure to furnish returns for a continuous period of 6 months.
Petitioner did not respond. On 27-9-2022, an order was passed cancelling the registration w.e.f. 19-10-2020.

Hon’ble High Court of Delhi has observed that:

As per Section 29(2)(c), the registration may be canceled from any date including retrospective effect, but the same cannot be arbitrary or whimsical.
In the present case, the sole ground for cancellation was non-filing of returns for 6 months. This would not be sufficient for cancellation of registration even for the period it was carrying business and filing returns.
There is a necessity for the proper officer to apply his mind and pass the cancellation order based on some objective criteria.
The present SCN also did not indicate that the petitioner’s registration was proposed to be cancelled with retrospective effect. Hence, the petitioner had no effective opportunity to contest the retrospective cancellation.
The petitioner has stopped carrying on business only from 19-10-2021 and t is from that date that they have requested for cancellation.

The Impugned Order shall take effect from 31-12-2021, which is till the date the petitioner has filed the returns.