High Court Rules Against Retrospective Cancellation of GST Registration Due to Non-Filing of Returns

Case Details: Ashish Garg v. Assistant Commissioner of State Goods and Service Tax, Delhi - [2023] 152 taxmann.com 683 (Delhi)

Judiciary and Counsel Details

• • Vibhu Bakhru & Amit Mahajan, JJ.
  • Abhishek Garg, Yash Gaiha & Ranesh Mankotia, Advs. for the Petitioner. 
  • Rajeev Aggarwal, Adv. for the Respondent.

Facts of the Case

In the present case, the department issued a Show Cause Notice (SCN) calling upon the petitioner to show cause as to why his registration should not be cancelled on the ground that he had not filed returns for a continuous period of six months. Thereafter, the order was passed cancelling registration from 02.07.2017.

He filed writ petition opposing cancellation of registration from retrospective effect and contended that it had already filed application for cancellation from 20.07.2019 which was rejected. It was also submitted that he could not reply to the said notice within the time as almost two years had elapsed since he had closed his business and the information as sought was not readily available.

High Court Held

The Honorable High Court noted that as per Section 29 of CGST Act, 2017, the concerned authority has discretion to cancel registration from a retrospective date, but this power cannot be exercised arbitrarily. There was no dispute that the petitioner had regularly filed his returns till 30.06.2019.

Since, the reason for proposing cancellation of petitioner’s GST registration as stated in SCN was non-filing of returns, the retrospective cancellation cannot extend to include earlier period for which returns were filed by assessee.

Therefore, it was held that the registration would be cancelled with effect from 30.06.2019 as there was no material on record to justify such retrospective cancellation of GST registration by the Adjudicating Authority.