M S BRIDGEKALA LUXURIOUS LIFESTYLE MANAGEMENT PRIVATE LIMITED  Vs COMMISSIONER OF DELHI GOODS AND SERVICES TAX AND ANOTHER -Judgment by Delhi High Court

$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 18.01.2024
,,,,,,,,,,
+ W.P.(C) 661/2024 & CM APPLs. 2992/2024, 2993/2024
M S BRIDGEKALA LUXURIOUS LIFESTYLE MANAGEMENT PRIVATE LIMITED ….. Petitioner

versus

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

Advocates who appeared in this case:
For the Petitioner: Mr. Rakesh Kumar, Advocate.
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 27.02.2023, whereby the GST registration of the petitioner was cancelled retrospectively with effect from 11.01.2020 and also impugns Show Cause Notice dated 08.11.2022.

2. Vide Show Cause Notice dated 08.11.2022, 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�

3. Subsequently, the impugned order of cancellation dated 08.11.2022 cited the following reason:-
�Failure to furnish returns for a continuous period of six months�
4. Learned counsel for the petitioner submits that petitioner could not file the returns on account of lapse on the part of the accountant. He submits that petitioner is aggrieved by the retrospective cancellation of registration with effect from 11.01.2020. He submits that registration should have been cancelled from the date of 08.11.2022 i.e. the date when the show cause notice was issued and the registration was suspended.
5. He submits that petitioner would apply for fresh registration.
6. We may note that though the Show Cause Notice states that petitioner failed to file returns under Section 39 of the Goods and Services Tax Act, 2017.
7. The impugned order seeks to cancel the registration with effect from 11.01.2020. There is no material on record to show as to why the registration is sought to be cancelled retrospectively.
8. 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.
9. 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.
10. 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.
11. In view of the above facts and circumstances, the order of cancellation is modified to the extent that the same shall operate with effect from 08.11.2020, i.e., the date when the show cause notice was issued and the registration was suspended.
12. It is clarified that the 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.
13. The petition is accordingly disposed of in the above terms.

SANJEEV SACHDEVA, J

RAVINDER DUDEJA, J
January 18, 2024/vp

W.P.(C) 661/2024 Page 1 of 4