C B ENTERPRISES vs COMMISSIONER OF DELHI GOODS AND SERVICES TAX AND ANOTHER
$~ 2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 22.02.2024
+ W.P.(C) 1658/2024
C B ENTERPRISES ….. Petitioner
versus
COMMISSIONER OF DELHI GOODS AND SERVICES TAX AND ANOTHER. ….. Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Shailender Verma, Mr. Subhash Chandra Gupta, Mr. Ravi Mohan Gupta & Mr. Praveen Goel, Advocates.
For the Respondents: Mr. Rajeev Aggarwal, ASC.
CORAM: –
HONBLE MR. JUSTICE SANJEEV SACHDEVA
HON’BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
[SANJEEV SACHDEVA, J. (ORAL)
1. Petitioner seeks direction to respondent to cancel the GST registration of the petitioner with effect from 26.11.2020 and impugns order dated 24.06.2021 whereby the GST registration of the petitioner was cancelled retrospectively with effect from 01.07.2017. Petitioner also impugns Show Cause Notice dated 07.04.2021.
2. Petitioner was the proprietor of M/s C.B. Enterprises and possessed GST registration.
3. Petitioner submitted an application seeking Cancellation of Registration Certificate on 26.11.2020 on ground of discontinuation of business with effect from 01.07.2020.
4. Pursuant to the said application, notice was issued by the respondent on 13.01.2021 seeking additional information and documents relating to application for cancellation of registration stating Cancellation Details – Others (Please specify) – REPLY OF ASMT-10 STILL AWAITED. IN THIS REGARD A REMINDER HAS ALSO BEEN ISSUED TODAY.
5. Application of the petitioner seeking cancellation was rejected vide order dated 30.01.2021 on the ground THE DEALER HAS NOT SUBMITTED THE REPLY OF NOTICE AND AS WELL AS ASMT-IO.
6. Thereafter, Show Cause Notice dated 07.04.2021 was issued to the petitioner on the ground that Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months..
7. Pursuant to the said show cause notice, impugned order dated 24.06.2021 was passed wherein the registration of the Petitioner was retrospectively cancelled.
8. It may be noticed that the impugned order dated 24.06.2021 passed on the Show Cause Notice does not give any reasons for cancellation of the registration. It, however, states that the registration is liable to be cancelled for the following reason Whereas no reply to notice to show cause has been submitted. We may note that the order of cancellation of registration dated 24.06.2021 makes a reference to a reply of the petitioner dated 16.04.2021 and then states that no reply to show cause notice has been submitted. The order also seeks to cancel the registration with retrospective effect from 01.07.2017. However, there is no material on record to show as to why the registration is sought to be cancelled retrospectively.
9. Further, Show Cause Notice dated 07.04.2021 and order dated 24.06.2021 does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, petitioner had no opportunity to even object to the retrospective cancellation of the registration.
10. In our view, order dated 24.06.2021 does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand.
11. 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 taxpayers registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
12. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payers registration with retrospective effect is that the taxpayers 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 respondents 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 taxpayers registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
13. It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons.
14. 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 26.11.2020, i.e., the date of the application for cancellation of registration.
15. Petitioner shall comply with the requirements of Section 29 of the Central Goods and Services Act, 2007.
16. It is clarified that 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.
17. The petition is accordingly disposed of in the above terms.
SANJEEV SACHDEVA, J
RAVINDER DUDEJA, J
FEBRUARY 22, 2024
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W.P.(C) 1658/2024 Page 5 of 5