GST Registration – Cancellation with retrospective effect from 1.7.2017 – Show cause notice of 7.10.2022 for failure to furnish returns for a continuous period of six months – Delhi High Court
The petitioner’s father Dershan Kapoor passed away on 18.11.2021 and the business was closed. No business was carried by the legal heirs in the name of proprietorship concern of the deceased.
The show cause notice dated 7.10.2022 was issued to the petitioner with the observation of “failure to furnish returns for a continuous period of six months”.
By the order dated 14.2.2023 the GST registration of the petitioner was cancelled retrospectively with effect from 1.7.2017.
HELD the show cause notice did not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Moreover, the impugned order does not give any reasons for cancellation. It, however, stated that the registration is liable to be cancelled since no reply to the show cause notice was filed. The said order itself is contradictory since it makes reference to the reply dated 7.11.2022 in response to the show cause dated 7.10.2022. Although Section 29(2) permits cancellation of registration, it cannot be done mechanically and it must be based on some objective criteria. Merely because a taxpayer has not filed returns for some period does not mean that the registration is to be cancelled retrospectively also covering the period when the returns were filed and the taxpayer was compliant. Thus, the registration can be cancelled retrospectively only where such consequences are intended and are warranted.
Judgment dated 3.4.2024 of the Delhi High Court in W.P. (C) No.4860 of 2024 of Rajat Kapoor Vs. Commissioner, State Tax, GST, Delhi and another
