PANKAJ PLASTIC  Vs COMMISSIONER OF DELHI GOODS AND SERVICES TAX AND ORS -Judgment by Delhi High Court

$~41
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 11.01.2024
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+ W.P.(C) 402/2024 & CM APPLs. 1819/2024, 1820/2024
PANKAJ PLASTIC ….. Petitioner

versus

COMMISSIONER OF DELHI GOODS AND SERVICES TAX AND ORS. ….. Respondents

Advocates who appeared in this case:
For the Petitioner: Mr. Rakesh Kumar & Mr. Praveen Kumar, Advocates.
For the Respondents: Mr. Rajeev Aggarwal, ASC with Mr. Prateek and Ms. Samridhi, Advocates.
CORAM:-
HON�BLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA

JUDGMENT

SANJEEV SACHDEVA, J. (ORAL)

1. Petitioner impugns order dated 23.11.2022 and Show Cause Notice dated 09.12.2022. Vide Show Cause Notice dated 09.12.2022, petitioner was called upon to show cause as to why the registration be not cancelled for the following reasons:-

�returns furnished by you under section 39 of the Central Goods and Services Tax Act, 2017�

2. Vide impugned order dated 23.11.2022, the registration of the petitioner has been cancelled with effect from the date of its registration on 01.07.2017.
3. We may note that though the Show Cause Notice states that petitioner failed to furnish returns for a continuous period of six months. No particulars or details have been mentioned in the Show Cause Notice. It appears that the Show Cause Notice extracts the reason in a standard format.
4. Further, the Show Cause Notice also does not mention the quantum of returns. The impugned order also does not state any reasons for cancellation of the GST registration retrospectively except to state that no reply to the show cause notice has been received. Both the show cause notices and the impugned order are bereft of any reasoning and particulars and are accordingly not sustainable.
5. The impugned order also seeks to cancel the registration with effect from 01.07.2017. There is no material on record to show as to why the registration is sought to be cancelled retrospectively.
6. Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration.
7. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer�s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
8. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer�s registration with retrospective effect is that the taxpayer�s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent�s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer�s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
9. In view of the above, the Show Cause Notice as well as the Impugned Order are set aside.
10. It would be, however, open to the respondent to take further action in accordance with law inter alia, cancellation of registration with retrospective effect. However, the same would be in accordance with law and pursuant to a proper Show Cause Notice and an opportunity of hearing being given to the petitioner.
11. Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due from the petitioner in accordance with law.
12. The petition is accordingly disposed of in the above terms.

SANJEEV SACHDEVA, J

RAVINDER DUDEJA, J
January 11, 2024/vp

W.P.(C) 402/2024 Page 1 of 4