Court :
Delhi High Court
Brief :
The Hon'ble Delhi High Court in the case of Aryan Timber Store v. Sale Tax Officer [Writ Petition (Civil) No. 628 of 2024 dated January 18, 2024] held that the GST Registration of an Assessee cannot cancelled with retrospective effect mechanically merely because the returns were not filed. It can be cancelled only if the proper officer deems fit to do so on some objective criteria. Hence, the order of cancellation was modified to extent that the same shall operate with effect from date when the Assessee first applied for cancellation.
Citation :
Writ Petition (Civil) No. 628 of 2024 dated January 18, 2024
The Hon'ble Delhi High Court in the case of Aryan Timber Store v. Sale Tax Officer [Writ Petition (Civil) No. 628 of 2024 dated January 18, 2024] held that the GST Registration of an Assessee cannot cancelled with retrospective effect mechanically merely because the returns were not filed. It can be cancelled only if the proper officer deems fit to do so on some objective criteria. Hence, the order of cancellation was modified to extent that the same shall operate with effect from date when the Assessee first applied for cancellation.
Aryan Timber Store ("the Petitioner") discontinued their business from March 31, 2019, and applied for cancellation of the GST registration on May 06, 2019. The Revenue Department ("the Respondent") issued a Show Cause Notice dated July 15, 2021 ("the Impugned SCN"), on the ground that the Petitioner had not filed returns for a continuous period of six months. The Respondent cancelled the GST registration retrospectively w.e.f. July 1, 2017. There was no material on record as to why the registration was cancelled retrospectively. The Impugned SCN did not put the Petitioner to notice that the GST registration is liable to be cancelled retrospectively. Accordingly, the Petitioner had no opportunity to even object to the retrospective cancellation of the registration. As a result, the Petitioner's GST Registration was cancelled with retrospective effect from July 1, 2017 vide order dated July 9, 2022 ("the Impugned Order").
Hence, aggrieved by the Impugned SCN and the Impugned Order, the present writ petition was filed by the Petitioner.
Whether the GST registration of the Petitioner be cancelled retrospectively?
The Delhi High Court Writ Petition No. 628 of 2024 held as under:
Similar was the case before the Hon'ble Delhi High Court in the matter of Sant Ram v. Delhi State GST and Ors. [W.P No. 15846 of 2023 dated December 11, 2023] where the court allowed the writ petition and set aside the order of GST Registration cancellation thereby holding that, it is important for the Proper Officer to independently arrive at the satisfaction set out in sub-section (1) or (2) of Section 29 the CGST Act for the purpose of GST Registration cancellation. The court also relied on the judgment of Union of India & Ors. v. Bharat Forge Ltd. &Anr. [(1970) 1 SCC 795] and Kritika Agarwal v. Union of India & Ors., [W.P. (C) 9424/2023 dated July 18, 2023] further noted that, the Proper Officer has to act independently and cannot act mechanically on the instructions of another authority.
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